BUSINESS IN BRIEF 17/8 Techcombank before tax earnings up 45% The Viet Nam Technological and Commercial Joint-stock Bank (Techcombank) posted pre-tax earnings of VND948 billion (US$45 million) in the first half, up 45.4 per cent compared to the same period last year and 80 per cent of its goal. Earnings from customer deposits were VND124.7 trillion ($5.8 billion), up 3.97 per cent year on year, while credit growth increased by 5.33 per cent to VND74,021 billion ($3.4 billion). Master plan for Ninh Binh City unveiled The northern province of Ninh Binh unveiled a master plan for Ninh Binh City to 2030 with a vision to 2050 at a ceremony yesterday. The city's area will be quadrupled to 21,052ha under the plan, approved by the Prime Minister in Decision 1266 dated July 28. The city will serve as the province's political-administrative, economic, cultural, historical and tourism centre, as well as a national cultural-historical and tourism site. It will become a transport hub and a gateway to the southern part of the northern coastal region. The plan's consultancy, Japan's Nikken Sekkei Civil Engineering Ltd., forecast that the population of Ninh Binh City would be around 285,000 in 2020 and 400,000 by 2030. The rural area surrounding the city will serve as a green belt and buffer zone for the nearby Trang An Tourism Complex, which was recognised by UNESCO as a world cultural and natural heritage site in June. VN could become world's top animal food exporter Viet Nam has the potential to become the world's leading exporter of cattle feed in the near future, the Ministry of Agriculture and Rural Development has said. This year, for the first time, animal feed has been listed as a leading export item by the customs department, which said that by the middle of last month exports had been worth nearly US$230 million. The exports went to 13 countries, mostly in Asia, the ministry said. China was the largest market with imports of more than $62 million, followed by Cambodia (nearly $46 million), Malaysia ($26 million), Japan ($20 million), South Korea ($10 million), and India ($9 million), the customs agency said. The US bought nearly $800,000 worth, it said. Many Vietnamese exporters have regular orders from key export markets, it added. Ho Sau, director of Viet Nong Lam Ltd Company, said his company produces cattle feed from sweet corn and other materials for export to South Korea and Japan. Its products are well accepted in the two markets and it gets orders for thousands of tonnes from them every month, he said. Cambodia is seen as a potential importer, the ministry said. Exports of agricultural produce to that country remain low. In the first half of this year seafood exports were worth $7.3 million, wood and wood products, $1.5 million, vegetables, $1.3 million, and coffee, $665,000. Pham Duc Binh, deputy chairman of the Cattle Feed Association, said animal husbandry is developing in Cambodia but its production of animal feed remains low, which provides Viet Nam an opportunity. Cambodia mostly imports feed for ducks and pigs. Some Vietnamese businesses have also built factories to produce animal feed there to take advantage of cheap raw materials like rice bran, sweet corn, and cassava. Nguyen Van Nhat, deputy general director of Vietnamese-French Cattle Feed Join-Stock Company (Proconco), said the company's factory in Cambodia produces more than 30,000 tonnes of animal feed a year. C.P. Viet Nam Livestock Breeding Join-Stock Company has also built factories in Cambodia and Laos. Circular outlines subsidised loans for fishermen Fishermen can get subsidised loans at 1-3 per cent interest for buying boats under a Government credit programme for which State Bank of Viet Nam has issued a draft circular. The circular, to take effect from August 25, focuses on policy support for fishermen going to the high seas for fishing. It allows individuals and organisations to borrow up to 95 per cent of the cost of a new boat if built of metal at an interest rate of 7 per cent, with the SBV providing a 6 per cent subsidy. For new wooden vessels they can borrow 70 per cent at the same interest rate though only a 3 per cent subsidy will be provided. Metal boats with an engine capacity of 400-800HP can borrow up to 90 per cent with a 5 per cent subsidy. The subsidy will rise to 6 per cent if the capacity is 800 HP or more. The loans will be 11 years and borrowers can use the new ships as collateral. According to the Viet Nam Economics News, SBV Governor Nguyen Van Binh said the central bank would instruct banks to ensure that the loan procedures are completed quickly to make access to capital easy for fishermen, businesses, and co-operatives. Banks must take the initiative to assess and identify borrowers from lists approved by local governments, he added. The new decree has been welcomed by fishermen because it addresses their major problem – that of raising funds to build large ships for deep-sea fishing. Huynh Trung Dung, a fishermen in Kien Giang Province's Kien Luong District, said: "This has brought great benefit to fishermen in need of capital. "Not only are the loan amounts high, interest rates low, and vessels allowed to be mortgaged for the loans, but also fishermen can pay the principal and interest over a long period. "Fishermen will have time to build ships without worrying about paying the principal and interest in the initial years." A Vietinbank official, who asked not to be named, said: "The decree gives great encouragement to fishermen to go offshore. "These credit support policies will help fishermen feel confident about taking loans to build large vessels and invest in modern equipment for fishing in the high seas, thus helping develop the economy and ensure the country's sovereignty over its waters and islands." Many banks have set aside considerable amounts for the programme and would lend as soon as the circular takes effect, he said. Vietnam’s first hybrid rice R&D station opens A Swiss-invested hybrid rice research and development (R&D) station was inaugurated in the Red River Delta province of Nam Dinh on August 14, becoming the first of its kind in Vietnam under the management of an international group. The station covers 4 hectares of land in Tan Thinh commune, Nam Truc district. It is invested and operated by Switzerland-based Syngenta, the world’s leading multinational group on agricultural chemicals and biotechnology. The facility, built at the cost of some 30 billion VND (1.4 million USD) in the first phase, is equipped with cutting-edge technologies and able to connect with other R&D stations of Syngenta around the world to share data and information. In the first phase, it will mainly use genetic resources provided by its global counterparts to cross-breed rice and expects to supply two or three new rice varieties with high quality and yield to the Vietnamese market by 2017. In the second phase after 2017, more modern laboratories will be set up to expand the work. The station will also develop new cultivation methods to improve the effectiveness of rice farming. Kumardev Datta, General Director of Syngenta Vietnam, said with its advantages in biotechnologies, Syngenta is able to mobilise its genetic resources around the globe to create rice plants that are suitable for Vietnam and help the country become a producer and exporter of hybrid varieties.- Central Highlands coffee growers renew old plantations Over 19,000 coffee growers in the Central Highlands have received assistance in the form of seedlings and training to renew their old plantations under the Nescafe Plan that was launched in 2011. The project, a joint effort between the Western Highlands of Agriculture and Forestry Science Institute (WASI) and the Nestle Vietnam, has offered nearly 6.9 million coffee seedlings at half of their original prices to 19,000 farmers in the provinces of Lam Dong, Dak Lak, Dak Nong and Gia Lai to replace old trees in their plantations. Also during the same period, around 21,000 farmers have received training in the 4C international standard, a baseline for sustainability in the coffee sector. By the end of this year, 3,000 more farmers in major coffee growing areas will undergo training under the project. WASI Director Le Ngoc Bau said the project will accelerate the replacement of outdated coffee trees in the region with new varieties which have an average yield of seven tonnes of beans per ha, nearly double the current average. According to the Vietnam Coffee-Cocoa Association (VICOFA), Vietnam now has over 622,000ha of coffee, mostly in the Central Highlands that yields some 1.4 million tonnes of beans each year. The acreage of coffee trees aged over 20 years that need to be replaced is about 86,000ha, and the figure will increase to 140,000 – 160,000ha in the next 5-10 years. Vietnamese coffee has been shipped to over 80 countries and regions worldwide. Germany and the United States remain Vietnam's largest coffee importers with 14 and 11 percent of market shares, respectively. Economic restructure helps deepen integration Vietnam should undertake stronger economic restructuring measures, targeting a more comprehensive and transparent effort, and allowing for more effective allocation of resources, radio The Voice of Vietnam (VOV) quoted Deputy Minister of Industry and Trade Tran Quoc Khanh as saying. In terms of multilateral relations, Vietnam has become an official member of the World Trade Organisation (WTO) since 2007 after more than 11 years of negotiations. In the region, Vietnam became a full member of ASEAN and then the ASEAN Free Trade Area (AFTA) in the 1990s. Together with ASEAN, Vietnam has participated in free trade agreements between ASEAN and China, India, the Republic of Korea, Japan, Australia and New Zealand. On bilateral relations, Vietnam has signed a series of important agreements, including a bilateral trade agreement with the US and an economic partnership agreement with Japan, and actively negotiated other FTAs with the EU and the Customs Union. International economic integration milestones have helped raise Vietnam’s regional and international status. Economic integration at different levels demonstrates Vietnam’s great efforts in grasping new opportunities, however, it poses huge challenges to the country. Simultaneously opening trade door for many partners will create high pressure on competition and urgent needs for legal system reform and commitment enforcement. The FTA with the EU and the Trans-Pacific Partnership Agreement (TPP) are new multilateral agreements with higher liberalisation. When joining these agreements, Vietnam needs to give stronger commitments to traditional fields - goods and services and non-traditional fields like labour, the environment, and e-commerce. Deputy Minister Khanh said to successfully integrate into the global economy, Vietnam should boost substantial integration, aiming to restructure the economy and reallocate resources in a more effective and transparent manner. Former Trade Minister Truong Dinh Tuyen argued that international economic integration should go along with domestic reform under which reform would create a premise for integration and vice versa integration would help boost domestic reform. Economic reforms and integration should be considered as key tasks, Tuyen said, adding that reform should also expand to other social fields, especially in the political system because political reform would pave the way for better economic reform. Sharing the same view, former WTO Director General Lamy said Vietnam should further raise its socio-economic status to integrate sustainably in the new period. In addition to macro reforms, the role of businesses must be heightened in the next phase of the economic integration, said Nguyen Thu Trang from the Vietnam Chamber of Commerce and Industry (VCCI). Under Prime Minister’s decision issued in 2012 on consultation regulation, agencies involving in international trade agreement negotiations have to directly collect proposals from the business community or through VCCI. However, the business community’s proposals and contributions during international negotiations have been limited so far, Trang said. Businesses’ participation in negotiations and the implementation of bilateral and multilateral agreements will be very productive to Government agencies in negotiations on important agreements in the near future, she noted. Corn cultivation boosted in Mekong River Delta Crop restructuring is one of the government’s agricultural restructuring key strategies, the Vietnam Economic News reported, adding that the Mekong River Delta is leading in switching from rice to other crops for higher economic efficiency, especially corn. With the advantages such as fertile soil and moderate climate, the Mekong River Delta has long been the country’s key rice producing area. However, rice production and consumption faced export difficulties due to increasing competition with rivals from Thailand, India, and Myanmar, and rice farmer incomes have been lower than expected. Meanwhile, other agricultural crops such as corn and soybeans are potential alternatives due to severe shortages. Switching from inefficient rice farming to other economically efficient crops such as corn farming is necessary for the Mekong River Delta in conformity with the governmentally approved agricultural restructuring project. Some provinces like Dong Thap, An Giang, Tra Vinh, Soc Trang, and Long An have deployed corn farming models, with the intention of increasing the value added to agricultural products and farmer incomes. The Corn Farming on Former Paddy Field in the Mekong River Delta project has been launched by the Institute of Agricultural Science for Southern Vietnam’s Agricultural Technology Research and Transfer Centre. The project has initially achieved positive results in Long An. The entire 20 hectares of former paddy field in My Hanh Bac commune, Duc Hoa district, planted with NK7328, NK66, and NK67 corn varieties has proved promising. It is estimated that the corn yield per ha may reach about 8-10 tonnes, about double the former rice yield. With the current fresh corn purchase price per kg of 3,900 VND, corn farmers may gain from 9.4-17.2 million VND per ha, up 36 percent compared with rice gains after costs. According to Director of the Long An’s Industry Promotion Centre (IPC) Nguyen Thanh Tung, corn, sesame and peanuts have been identified as good alternatives for the province, with corn being most important and farmed for the spring-summer crop. The Ecofarm JSC currently based in Duc Hoa district, Long An, will build a corn processing complex and be responsible for local corn purchases. The corn varieties provided by the Syngenta Co., Ltd for the model have proved adaptable to the local climate and high possible productivity. In the coming years, Syngenta will strive to support the crop restructuring initiated by the government for inefficient rice farming areas to help farmers increase incomes, said Ngo Lanh, Solution Development Director of Syngenta Co., Ltd.- Australian initiative aims for fair trade competition in Vietnam The 2.9 million USD initiative "Restructuring for a More Competitive Vietnam” (RCV), recently launched by the Australian government, is looking to forge a level playing field for all economic sectors. The two-year initiative comes as Vietnam is on its course of economic restructuring but stuck in decreasing growth and high inflation, said Deputy Minister of Planning and Investment Dang Huy Dong. He also admitted that macro economic instability has emerged as a concern during recent years, as seen in high levels of public and foreign debts, and the rise in non-performing loans. Director of the Central Institute of Economic Management (CIEM) Nguyen Dinh Cung ascribed the slow economic restructuring to the so-called “interest groups”, including the State-owned firms that take advantage of their economic privileges to manipulate the market. Trinh Anh Tuan, Deputy Director of the Department of Competition Management under the Ministry of Industry and Trade, cited the example of the telecommunication market, which clearly showed that when monopoly was abolished, enterprises were forced to restructure themselves in order to survive, while consumers benefitted from the competition on the market. Raymond Mallon, RCV senior advisor said the project will help improve the economy’s competitiveness as well as transparency, thus reducing corruption. Cung said CIEM will suggest ways to strengthen State firms economically and improve their corporate governance skills. The Law on Enterprises, once it is adopted, is expected to create a fair environment for all economic sectors and businesses will see much room for growth, he said. Banks forecast improved financial performance Nearly 94 percent of Vietnamese bankers expect an improved financial performance, but bad debt levels remain a concern, says a study on the banking sector. The latest study on ‘Banking in Emerging Markets Survey: Investing for Success' conducted by tax, auditing and finance consulting firm, E&Y, was released in Hanoi on August 13. This year's survey includes responses from 50 senior bank executives and more than 9,000 bank customers across 11 key rapid-growth markets (RGMs) at three stages of financial maturity. The frontier market includes Kenya, Nigeria and Vienam; transitional market includes Colombia, Egypt and Indonesia while the established one includes Chile, Malaysia and Mexico along with South Africa and Turkey. In Vietnam, 17 banks and 800 customers responded to the survey. The survey, which revealed that the outlook for retail and corporate deposits was bright, also showed strong growth in customer demand and the broader economy. An increase in the demand for credit was expected but with 76 percent of bankers worried about bad debts, the outlook for lending was less positive than in their previous survey. Specifically, Vietnamese banks were the least positive of all RGMs about lending to small-and-medium-sized enterprises (SMEs) with the outlook deteriorating the most in this segment. However, strong growth in demand was anticipated for retail credit products in both personal loans and credit cards. "Demand in growth for savings and deposits is higher than in other Asian Pacific markets," said Keith Pogson, Managing Partner of E&Y's Financial Services – Asia Pacific (APAC) region. The survey also revealed that 15 out of 17 Vietnamese banks expected a slight improvement in their performance, along with the hope of an improved economy. The expected demand and growth has affected the merger and acquisition advisory services the most. The largest increase in demand was in loans to SMEs and corporations. Keith said higher lending was anticipated in all sectors except construction and commercial real estate. Lending to the energy sector was also set to grow with government planning to upgrade and build new oil refineries and invest in renewables. "Banks would struggle to maintain net interest margins and would have to find new sources of revenue," he added. With most banks concerned with rising bad debts, respondents expected the managing of credit risks to be their greatest challenge. This was the reason why banks would focus on cost reduction and risk management to drive profitability. They would seek to grow their business by focusing on cross-selling and introducing new channels, products and services. Referring to the levels of regulation, he said Vietnamese banks expected fewer regulatory mechanisms than other frontiers banks and banks in other APAC markets. However, 9 out of the 17 Vietnamese banks said their regulatory burden would increase. In addition to global regulations, banks in Vietnam were faced with a range of domestic regulatory pressures including a bank deposit rate cap of 6 percent on deposits with maturities in less than 6 months. Total shareholding by foreign investors does not exceed 30 percent of charter capital of a Vietnamese commercial bank. He said that among APAC banks, Vietnamese are the most positive about the impact of Quantitative Easing (QE) tapering off. Twelve out of 17 Vietnamese banks expected an increase in the flow of foreign investments. The comparative strength of Vietnam was also highlighted by its declining sovereign spreads relative to other APAC and frontier markets. Of those banks expecting change, 60 percent believed it would be driven by acquisition of smaller banks by larger domestic banks. On the question of foreign competition, the bankers believed Japanese and European banks were the greatest threats. He also said that a greater portion of Vietnamese respondents expected their loan loss provisions to increase over the next 12 months than respondents from other frontier APAC banks.- Rice prices fall in Mekong Delta Rice prices in the Mekong Delta have fallen by around VND150 per kilo compared to Wednesday and rice traders attributed this sudden drop to the possibility that rice exporters are seeking to suppress buying prices after China halted importing Vietnamese rice via border trade. Duong Van Men, a ride trader in Lap Vo District, Dong Thap Province, said enterprises were buying a kilo of unprocessed IR 50404 rice at VND7,500-7,700 per kilo in the province and An Giang Province. At Ba Dac Wholesale Food Market in Tien Giang Province, rice prices have declined to VND7,550-7,600 per kilo. Men said it is possible that rice export firms want to push down rice prices after China’s suspension of rice imports from Vietnam via border trade. Nguyen Thanh Tho, a rice trader at Ba Dac Wholesale Food Market, said rice export firms know that rice traders often rush to sell their stocks to avoid losses and if this happens they will gain more profit. However, such a move only scares inexperienced traders because rice prices cannot fall strongly in the coming time due to limited supply on the local market. Tho said the volume of paddy yet to be harvested in the delta is very small. Huynh The Nang, general director of Vietnam Southern Food Corporation (Vinafood 2), told the Daily that China’s suspension of rice imports from Vietnam will leave no huge impact on domestic prices as demand of overseas markets such as the Philippines, Malaysia and Indonesia for Vietnamese rice is high while the local supply is not abundant. The Vietnam Food Association said its member enterprises shipped nearly 616,000 tons of rice in July with a total value of US$265 million and more than 3.6 million tons of rice worth US$1.56 billion in the first seven months of this year. Exports to US continue to trend upwards The country’s exports to the US in the month of July jumped 6.4% on-month to US$2.65 billion, while climbing a healthy 23% over last July’s exports, reports the Ministry of Industry and Trade (MoIT). Overall, the MoIT reports total export revenue from the US market for the first seven months of 2014 tallied in at US$16 billion, up 24% on-year. High-valued export items included textiles and garments and footwear registering on-year increases of 18.3% and 20.9% respectively. Vietnam consistently builds ASEAN Economic Community Vietnam together with other ASEAN countries gives top priorities to developing the ASEAN Economic Community (AEC). The pledge was made at a seminar entitled “Upgrading Vietnam’s position towards AEC 2015 and beyond” in Hanoi on August 12 attended many leading scholars and economists from the region. The seminar aimed to share experience and initiatives to grasp advantages of the AEC to overcome challenges in the future, like migrant laborers, institutional making and regulation reform. It provided a good chance for State agencies, private sectors and foreign experts to discuss important issues in ASEAN, such as developing small-and medium-sized enterprises (SMEs) and taking part in supply chain and international economic integration. Deputy Minister of Industry and Trade Nguyen Cam Tu said in the context of looking toward forming the ASEAN community, particularly the AEC by 2015, this is a forum to review progress to date and how it has impacted the country’s economy. ASEAN Secretary General Le Luong Minh said since joining the AEC, Vietnam has recorded economic strong growth through inner-bloc investment and export promotion. From now to 2015 and post 2015, the ASEAN Community has many tasks to perform, particularly removing tariff barriers, enhancing investment appeal and bridging the development gap among regional countries, Minh said. The seminar is part of the Economic Research Institute for ASEAN and East Asia (ERIA) capacity building program which has been carried out since 2008 in Cambodia, Laos, Myanmar and Vietnam with a view to boosting integration among ASEAN member countries. Rubber industry needs to improve competitiveness Vietnam ranked the world's third largest natural rubber producer and the fourth largest exporter following Thailand, Indonesia and Malaysia in 2013. Currently, when the rubber supply exceeds the demand, Vietnam needs to enhance the competitive edge to be able to maintain its rank in the global market, the Vietnam Business Forum Magazine (VBF) reported. According to Ministry of Agriculture and Rural Area Development, rubber export in June was estimated to be 86,000 tons, earning 153 million USD. With this estimation, in the first 6 months of 2014, rubber export is estimated to reach 337,000 tons, raking in 644 million USD, down 11.7 percent in terms of quantity and 33 percent in terms of value over the same period of 2013. On average, rubber was exported at a price of 1,842 USD a ton for the first 5 months of 2014, down 28.9 percent over the same period of 2013. Referring to export market, although China and Malaysia remained Vietnam’s largest consumption markets of rubber in the first 5 months of 2014, the value was in the downtrend over the same period of 2013. In the first 5 months of 2014, Holland’s market posted the sharpest growth, 6 times higher in terms of quantity and 5 times higher in terms of value over the same period of 2013. Since the beginning of 2014, rubber price dramatically dropped due to supply surplus; many farmers cut down rubber trees and cultivated other plants. Besides, there were many other obstacles like export tax, VAT tax, credit support package for farmers, and export guarantee. At a recent conference on rubber production 2014, Minister of Agriculture and Rural Area Development Cao Duc Phat emphasized that rubber production was an important industry, having great impacts on farmers’ income. As a matter of fact, Vietnam should diversify its rubber export markets. Also at the conference, delegates said that it was time to promote restructuring the rubber industry in order to develop the sector in a sustainable manner as well as to increase export value. Cutting down of rubber trees and growing other plants of farmers have caused great losses for Vietnam ’s rubber industry. Explaining this situation, Chairman of Vietnam Rubber Group Tran Ngoc Thuan said when rubber’s price was high, many people rushed to borrow capital from the banks to grow rubber trees or repurchase young plants. By now, when price has decreased, farmers face losses and cut them down. They have cut down not only 2 to 3 year old rubber trees, but also trees with rubber latex. In another case, planters have not harvested rubber latex because revenues from rubber latex cannot cover costs for employees. As price of rubber latex has dropped to the lowest level for the last 3-4 years, Minister Cao Duc Phat officially required farmers not to expand newly grown rubber tree area, at the same time to harvest latex properly, reduce costs for employees. Intensive production is needed to improve added value for rubber. The planting department has also warned provinces of not expanding rubber tree area. At the same time, they should apply techniques to harvest latex to reduce prices. Besides, provinces should adjust production area in the rubber industry in direction of stopping growing new rubber trees, concentrating on re-growing on old areas, as well as producing intensively rubber plantation to improve productivity and quality. Specifically, rubber plants outside planning areas, weak plants should be replaced by other trees with higher benefits; old rubber plants should be cut down for wood and be prepared for re-growing. Vietnam Rubber Group also proposed several incentives relating to VAT, corporate income taxes, credit package for rubber industry, policies on land rent fees, insurances, storage for rubber latex in the future. Individual buyers help save property market Many individuals have used their own money to buy homes, thus helping prevent the local realty market from going bust, the Saigon Times Daily reported. The point was shared by former Deputy Minister of Natural Resources and Environment Dang Hung Vo at an international seminar on property management and the role of financial institutions, co-organized by the Bank for Investment and Development of Vietnam (BIDV) and Japan’s Sumi Trust Bank in Hanoi on August 6. “Realty inventories are high and many investors are worried about this but they have not gone bankrupt. This is credited to individuals who have used their own money to purchase the apartments of which they will take delivery in the future,” the Daily quoted Vo as saying. Vo cited sources of administering agencies as saying that the value of realty inventories is some 100 trillion VND, excluding the money individuals have deposited for the apartments which will go up at housing development projects. Vo said the individual deposits are huge but there are no official statistics about this. He noted that many property firms have complained about the stagnant property market but up to 80 percent of listed realty companies have made profits. Can Van Luc, director of a training institute under BIDV, disagreed with Vo’s view, saying that bank loans account for 70 percent of the capital for the property market while the rest comes from households and individuals; equity, shares and bonds issued by companies and realty funds. Luc estimated bank loans for the property market at nearly 262 trillion VND (some 12.5 billion USD), making up 8 percent of the total outstanding loans as of the end of last year. Phan Duc Tu, General Director of BIDV, said bad debt of the property market peaked at 240 trillion VND (11.5 billion USD) in May last year. However, it is now under control and makes up a mere 4 percent of total outstanding loans. Vu Van Phan, Deputy Head of the Housing and Real Estate Market Management Department under the Ministry of Construction, said the property market has shown signs of recovery since the middle of last year. There were more than 4,000 successful property transactions in Hanoi in the first half of this year, doubling the number in the same period last year. Realty inventories have dropped to 83 trillion VND worth as of end-June, a 35.4 percent decline versus the first quarter of last year. Phan said there will be more positive factors for the property market, citing the draft amendments and supplements to the laws on housing and realty trading, and lax conditions for beneficiaries of the VND30-trillion low-cost home loan program and for foreigners to buy homes in Vietnam. Vo said housing prices in Vietnam are 15-fold higher than the average annual income of Vietnamese workers compared to the 25 times higher than the average annual income of labourers as recently announced by the Ministry of Construction. Supporting industry helps push Binh Duong’s trade surplus Southern Binh Duong province’s policy of developing supporting industry has contributed to increasing the locality’s trade surplus in the first seven months of this year to nearly 1.5 billion USD, according to the provincial Department of Planning and Investment. The department’s statistics showed almost half of new investment projects in the locality in the January-July period were in the supporting industry. As a result, the local content rate in the textile-garment and footwear has risen to 30-40 percent. Foreign direct investment in Binh Duong totaled 1 billion USD so far, 400 million USD of which was poured into 83 new projects and the rest was added to 69 existing ones. According to Lee Kap Soo, KyungBang Vietnam General Director, Vietnam is a potential market of materials for the textile industry, particularly in the context of the Trans-Pacific Partnership (TPP) agreement. For that reason, KyungBang group has poured an additional 54 million USD in its 40 million USD factory in Binh Duong to raise its production capacity of cotton yarn serving local textile and garment makers. Vo Van Cu, Director of the provincial Department of Industry and Trade said many local enterprises shifted to domestic supply of materials, thus easing dependence on imports and increasing export surplus. Binh Duong posted over 8 billion USD in export turnover so far this year, up 13.3 percent against the same period last year. Of the figure, the textile industry accounted for over 1 billion USD, a year-on-year increase of over 20 percent, while the footwear sector brought home 648 million USD, 18 percent higher than that recorded a year earlier. Binh Duong, together with nearby Ho Chi Minh City, and Dong Nai, Ba Ria – Vung Tau, Binh Phuoc, Tay Ninh, Long An, and Tien Giang provinces, forms the southern key economic region. Aiming for sustainable industrial development goals, the province has tried to encourage investment in high-tech and supporting industries, projects using fewer laborers and those do not cause negative impacts on the environment. Russia lifts ban on tra fish imports from Vietnam Russia has approved imports of Vietnamese tra fish, also known as pangasius, after more than six months of interruption due to food safety concerns. The National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad) said the Russian Federal Service for Veterinary and Physio-sanitary Surveillance (VPSS) has announced removal of a ban on tra fish products exported by seven Vietnamese seafood companies to Russia and the Customs Union of Belarus, Kazakhstan, and Russia. Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said representatives of the Ministry of Agriculture and Rural Development and the association had met and requested Russian food safety authorities to lift the ban on tra fish imports from Vietnam right after the country issued the ban. The request has been responded by Russian authorities. Before the ban was lifted, Vietnamese firms were allowed to sell only dried seafood products to the Russian market. Talking to the Daily earlier this year, Hoe forecast Russia would re-open its market to Vietnamese tra fish at the end of last April but new problems caused delays until August this year. Russia banned imports of tra fish from Vietnam since January 31 after its inspectors made a field trip to the processing facilities of eight local enterprises allowed to export tra fish to that market. In 2008, Russia also imposed a ban on imports of Vietnam’s tra fish products due to food safety concerns. Draft law on SEZs needs more time to go before NA Submission of a draft law on special economic zones (SEZs), which is expected to be called the law on special administrative and economic entities, to the National Assembly (NA) Standing Committee has been delayed as relevant agencies need more time to improve the draft. Over the past two years, Quang Ninh, Kien Giang and Khanh Hoa and other localities have sought the Government’s approval to establish SEZs in line with their models. These SEZ models contain breakthrough mechanism and investment incentives aimed at attracting foreign investors to high-tech and casino projects to speed up development in their localities. The local government structure in some localities where SEZs are planned to go up such as Van Don in Quang Ninh, Phu Quoc Island off mainland Kien Giang and North Van Phong in Khanh Hoa will operate under a special people’s committee, which is different from the current people’s committee model at city and provincial and lower levels. A host of seminars have been held for experts and representatives of agencies to comment and point out advantages and disadvantages of the SEZ models. The Government used to assign the Ministry of the Interior to draft a law on SEZs after the Ministry of Planning and Investment refused to do this for submission to the NA Standing Committee before putting it into the legislation agenda next year. However, Prime Minister Nguyen Tan Dung on August 11 issued an announcement rescheduling the time for drafting the law as the breakthroughs related to the government structure for such SEZs, investment modes and incentives beyond Vietnam’s current laws have not been tested in reality. Moreover, much controversy has arisen for the feasibility of SEZs stipulated in the draft law. Therefore, the Prime Minister suggested more efforts to carry out a comprehensive research over the aforesaid matters, especially development mechanism of the special administrative and economic entities. The Ministry of Justice has been told to represent the Government to postpone submission of the draft law to the NA. Vietnam once had Vung Tau-Con Dao SEZ when Shenzhen SEZ was established in China. However, Vung Tau-Con Dao SEZ was dissolved in 1991. No SEZ in Vietnam has been established since then. Even economic zones at border gates and in coastal areas mushroomed years ago but many have gone or have been scaled down following a review of the Ministry of Planning and Investment last year. Barcodes to apply to import-export declaration forms The local customs is mulling plans to use barcodes on the declaration forms for import and export goods in order to reduce the time for procedure processing and goods clearance at ports and border gates. Deputy Finance Minister Do Hoang Anh has requested the General Department of Customs to draw up appropriate measures to make goods clearance simple and short in order to assist enterprises in their import-export activities. As part of the request, the department has been told to consider using barcodes on customs declaration forms. The barcodes should contain the information about number and date, type of customs declaration form, import and export format, quantity and registered number of container. Barcodes are expected to help speed up cargo inspections and customs clearance. In the long term, barcodes will assist authorities to check the import and export goods en route to and from ports. In addition, the deputy minister has told the General Department of Customs to slash the number of documents and procedures for customs declaration forms. Experts are concerned that inter-sectoral collaboration challenges the general target of customs agencies to shorten the time for exporters and importers to complete customs procedures. The Ministry of Finance calculated customs paperwork accounts for only 28% of the time needed for goods clearance at border gates and the remainder is related to port authorities and handling capacity, border officers and shipping lines among others. In Vietnam, 34% of the goods imported and exported via border gates are subjected to licenses, quality criteria and animal quarantine processes, whereas the proportion ranges from 10% to 18% elsewhere in the world. These processes are managed by eight ministries and governed by 11 different laws in Vietnam. The finance ministry expected using barcodes on the declaration forms for import and export goods will help address the problems arising from inter-sectoral collaboration between ministries and agencies. The Ministry of Finance has issued a decision abolishing a dozen of customs procedures, bringing down the total number of procedures under its management to 164. Bad debt in HCMC up Bad debt at credit institutions in HCMC grew in the first months of this year and the irrecoverable loans accounted for a large proportion of total bad debt in the city, according to a recent report sent by the HCMC government to the central bank. The report showed bad debt in the city had amounted to VND46.407 trillion as of May 31 this year, making up 4.84% of total outstanding loans and up 3.38% against last year. The debt in group 5, which is classified as being potentially irrecoverable, took the highest proportion, at 70.51%. Financial leasing companies had huge bad debt, accounting for 35.7% of their total outstanding loans, while the ratio at finance companies was 13%. Foreign banks incurred the lowest amount of bad debt with only 2.9% of their combined outstanding loans. The respective ratios at commercial joint stock banks and commercial State banks were 4.9% and 4.4%. There was VND6.626 trillion of bad debt settled in the city in January-May, with VND2.041 trillion collected in cash, VND1.140 trillion sourced from risk provision funds, VND229 billion from selling collateral sales and VND852 billion bought by Vietnam Asset Management Company (VAMC). Though the collateral value (VND82.592 trillion) was much higher than bad debt (VND46.407 trillion), the city government said it was difficult to handle bad debt due to many factors, including slow economic growth, stock market, real estate and the business efficiency of enterprises. According to the report on operations by the central bank’s HCMC branch in the first six months of this year, all of the 14 commercial joint stock banks based in HCMC have mapped out restructuring plans for 2013-2015, with 11 plans approved by the central bank. The three banks which have not had their restructuring plans approved by the central bank are Sacombank, HDBank and Southernbank. SOE equitization to fuel M&A activity Experts forecast equitizing hundreds of State-owned enterprises (SOE) between now and next year as ordered by the Government will lead to stronger merger and acquisition (M&A) activity in Vietnam. The M&A activity is also supported by State business groups and corporations required to divest from non-core business areas, including banking, real estate and securities investments. Experts said at Vietnam M&A 2014 Forum organized by the Ministry of Planning and Investment in HCMC last week that SOEs will provide the market with a huge amount of capital via their divestments of non-core investments and equitization, and these are great opportunities for investors. John Ditty, head of Advisory KPMG Vietnam and Cambodia, said equitizing State corporations, including MobiFone, Vietnam Airlines and Vinatex will spur the M&A market and open opportunities for private investors to take part in management and operation of these enterprises. Japan has emerged as one of the major foreign investors in Vietnam. Sam Yoshida, senior managing director of Recof, an M&A consulting firm in Japan, said more investors from the country in Northeastern Asia are keen on the Vietnamese market thanks to low labor cost, a plentiful supply of labor, political stability and great potential for growth. Statistics showed Japanese firms have invested in a dozen of sectors in Vietnam and participated in at least three M&A deals in each sector. Yoshida also mentioned the factors for successful deals with Japanese investors. “Vietnamese enterprises need to be patient and provide accurate details when they negotiate with Japanese partners. Prices are not the top priority of Japanese investors, it is long-term benefits,” Yoshida said. At a meeting in Hanoi last week, Prime Minister Nguyen Tan Dung told ministries and localities to speed up the equitization of State-owned enterprises (SOEs) and continue improving policies and mechanisms to address the problems arising from the SOE restructuring process. It is expected that the target for 432 SOEs to go public towards the end of 2015 is possible as the pace of SOE equitization in the past seven months of this year was fast, according to the Steering Committee for Enterprise Reform and Development. In the January-July period, State corporations and groups divested a total of VND2.975 trillion, three times higher than that of last year, but the divestment process remained slow. There have been 76 enterprises restructured in the year to date, with 55 equitized, two dissolved, one sold, 15 merged and three filing for bankruptcy. As of last month, the Prime Minister had passed the restructuring plans of 20 State groups and corporations, including Vietnam National Textile and Garment Group (Vinatex). Vinatex is scheduled to offer its initial public offering (IPO) on the Hochiminh Stock Exchange (HOSE) in September this year. According to Vinatex’s equitization plan approved by the Government, the group has total chartered capital of VND5 trillion. After the group goes public, the State will retain a 51% stake while 24% will be offered to strategic investors, 24.4% put up for auction and 0.6% sold to employees. Another State corporation, Vietnam Airlines, is proceeding with a plan to launch an IPO later this year and sell shares to strategic investors in the fourth quarter of this year before it operates as a shareholder-held concern from January next year. According to Decision 1807/QD-BGTVT signed by Minister of Transport Dinh La Thang, the value of holding company Vietnam Airlines was more than VND57.1 trillion (over US$2.7 billion) as of March 31 last year, with State capital making up more than VND10.5 trillion. The corporation under the Ministry of Transport plans to increase its chartered capital from more than VND14.1 trillion this year to VND26.32 trillion in 2018 by selling shares to investors or its shareholders after equitization. Vietnam Airlines wants to sell 25% of its chartered capital to investors at the IPO. Later, the State holding at this corporation will gradually decline to 65%. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR