BUSINESS IN BRIEF 10/8

Seafood service firms dominate Vietfish 2014

The number of firms providing services and equipment for the seafood sector make up 65% of 173 corporate exhibitors at the ongoing Vietnam Fisheries International Exhibition 2014 (Vietfish 2014) in HCMC.

The Vietnam Association of Seafood Exporters and Producers (VASEP), the organizer of Vietfish 2014, said there are more seafood service providers than in previous years. Seafood processors and exporters are other exhibitors at the event, which opened at the Saigon Exhibition and Convention Center (SECC) in District 7 on August 6.

The 16th exhibition is attended by many big local and foreign companies, including from Japan, the United States, Belgium, China and South Korea.

Truong Dinh Hoe, general secretary of VASEP, said Vietfish 2014 showcases various seafood products and services as well as equipment and technology for cold storage of seafood.

Pham Anh Tuan, deputy head of the Vietnam Directorate of Fisheries, said the participating companies have the opportunity to learn about latest market trends and consumers’ needs so as to turn out appropriate products.

During the show that lasts until August 8, there are workshops on Vietnam’s seafood industry, production of safe and sustainable seafood in line with the Global GAP (Good Agriculture Practices) standards, the ASC (Aquaculture Stewardship Council) certification for shrimp, and technologies for the seafood sector.

In a related development, the Ministry of Agriculture and Rural Development has issued Circular 23/2014/TT-BNNPTNT guiding the implementation of farming, processing and exporting pangasius or tra fish.

The circular, which will take effect on September 12, requires exporters to enclose certificates for safe seafood processing and purchases of unprocessed tra fish in their applications for tra fish export contracts.

The cooperation between Smartcom and Philips mobile opens more chances for customers

Philips has already been well-known in the field of lighting products and appliances. After a silent period, Philips now continues to launch new products with the cooperation with Smartcom – one of Vietnam's leading distributors. The cooperation has brought an amazing breakthrough with the unique battery technology of Europe at very attractive prices.

On the afternoon of July 25th 2014, Smartcom had the honor to become the distributor of Philips Mobiles in Vietnam with 5 products launched. These products surprised guests with their advantaged and convenient features which are given by Philips.

Also at this Press Conference, Linh Nga – the Vietnamese famous dancer - appeared in the opening performance with the mermaid dance, implying "Everything starts smoothly like the flow of water" as a wish to Philips and Smartcom cooperation.

Two representatives from Philips, Mrs. Toni Wang (Oversea Business Director) and Mr. Yen Lim (Global Brand Licensing), expressed their appreciation of the Vietnam mobile market’s potential. This is also the reason why Philips would like to firstly introduce these products in Vietnam among Southeast Asia. Philips also made a commitment to invest in more optimized, outstanding and innovative products based on the needs and experiences of customers.

On the side of distributor, Mr. Phan Quang Tuan Anh (Smartcom Director) introduced the 5 new products of Philips including X2566, W6610, S308, S388, I908 which fit many customer targets such as ordinary and higher class, the young and the elderly. The most special key selling point of Philips mobile phone is battery technology. According to Mr. Phan Quang Tuan Anh, who had experienced Philips W6610 product himself: "It takes 10 minutes to charge it for a 10-hour use, and charging once for 3-day using." Now, with Phillips mobile phone, customers can now be completely comfortable on the long trips without the mobile phone battery’s concerns.”

Not only the usual features of a phone, Philips has also brought humanity messages “We care for people” in X2566 product. This is a gift that Philips brought to the senior citizens. With large fonts, emergency call button, voice dialing, and so forth, this product is really suitable for  the health and demands of the senior citizens.

Both guests and  the media community are very excited about the information in this event. Many questions were raised in the Q&A section. The Philips' new products have brought the fresh wind from the distant Holland tulip fields to a dynamic Vietnam. This wind is filled with the promise of success.

Vietnam Air, Jet Airways ink code-share deal

Vietnam Airlines and India’s Jet Airways have entered into a reciprocal code-share agreement to offer guests enhanced connectivity and seamless access when traveling throughout the combined networks of both airlines.

The code-share flights will provide more options for guests to travel between India and Vietnam, with convenient connections over the international gateways of Singapore and Bangkok.

Under the code-share pact, Jet Airways will place its marketing code on Vietnam Airlines’ flights from Bangkok and Singapore to HCMC and Hanoi. In turn, Vietnam Airlines will have its marketing code put on Jet Airways’ services between Bangkok and Mumbai and Delhi, and Singapore and Mumbai, Delhi and Chennai.

Gaurang Shetty, senior vice president for commercial at Jet Airways, said in a statement that the code-share partnership with Vietnam Airlines will further strengthen the global network of both airlines and provide increased benefits to their passengers.

“This new partnership between Jet Airways and Vietnam Airlines illustrates our group’s strategic positioning that continuously strengthens our offer between India and the rest of the world by developing our network,” Shetty said. “With the seamless connections offered by this arrangement, we are confident that this code-share will see a further increase in demand for business and tourist travel between India and Vietnam.”

Duong Tri Thanh, vice president of Vietnam Airlines, said the conclusion of a code-share agreement with Jet Airways demonstrates the value of the partnership between Vietnam Airlines and its strategic partner in India.

“We shall make all possible effort to maximize the opportunities offered to our combined network in order to bring the most convenience to our valued customers who travel from India to Vietnam via Bangkok/Singapore and vice versa,” Thanh said.

Vietnam Airlines said to create better connections between the two countries for customers, the national flag carrier will also put its code on Jet Airways service to Vietnam from November 5 this year.

Vietnam Airlines now operates more than 300 daily flights on 94 routes connecting 21 domestic and 29 international destinations. The SkyTeam Alliance member has a fleet of 82 aircraft, including Boeing B777s, Airbus A330s, A321s, and plans to take delivery of modern aircraft as Airbus A350XWBs and Boeing B787-9s in the coming years.

Jet Airways now has 112 aircraft comprising 10 Boeing B777-300 ERs, eight Airbus A330-200s, four Airbus A330-300s, 72 next generation Boeing B737s and 15 ATR 72-500s and three ATR72-600s. The airline flies to 74 destinations in and outside India, including Bangkok, Brussels, Colombo, cities in the Middle East, Hong Kong, London, New York, Paris, Singapore and Toronto.

M&As to spike as economy grows

There will be a wave of mergers and acquisitions in Vietnam in the next five years when the economy recovers and foreign direct investment surges, an international conference heard in HCM City on August 7.

Vietnamese and foreign experts said t it could result in deals worth a total of US$20 billion.

The next five years will also see Vietnam deepen its international integration through the Trans-Pacific Partnership agreement, free trade agreements with the EU and the Republic of Korea, and an FTA with the Russia, Belarus and Kazakhstan customs alliance, and by joining the ASEAN Economic Community next year.

Deputy Minister of Planning and Investment Nguyen Van Hieu, who delivered the opening speech, said M&As have been growing rapidly in Vietmam, with the total value of deals reaching US$5 billion last year compared to a mere US$1 billion five years ago.

M&As have proven to be highly attractive to both domestic and foreign investors, he said, adding that despite the economic slowdown and difficulties due to China's illegal placement of an oil rig in the East Sea, the country's macro economy has maintained stability and grown at 5.18% this year.

According to the ministry, foreign investment has continued to flow in, with FDI accounting for around 25% of the gross capital formation.

John Ditty, general director of KPMG Vietnam, concurred with Hieu, saying Vietnam has been enjoying solid economic growth despite the impacts of the global financial crisis.

The Government has been actively pursuing restructuring policies to maintain economic stability and further boost economic growth, he said.

The total value and number of closed M&A deals started to slow down in 2013 and 2014 would also be a subdued year, he said. The trend is expected to pick up next year when the market sees more realistic expectations and transparency from sellers, he said.

The forum, organised for the sixth time by the Ministry of Planning and Investment and attended by 450 local and international experts from the US, Japan, and ASEAN member countries, offered state management agencies an opportunity to source ideas and inputs for improving the legal framework.

Thua Thien-Hue adjusts IZ development planning

The central province of Thua Thien-Hue has announced its adjustment on development planning of six industrial zones (IZs) towards 2020, which has been approved by the prime minister.

Accordingly, the six IZs will cover a total area of nearly 2,400 hectares with an occupancy rate of 65 per cent by 2020.

The Phong Dien IZ will be expanded to 700 hectares, up by 300 hectares while the Phu Bai IZ has been reduced by 75.29 hectares to 743.47 hectares. They are expected to be filled to 90 per cent of their capacity and generate over 30,000 jobs.

Thua Thien-Hue province has 90 projects with total registered capital of VND18.2 trillion (US$870 million), including $218.8 million from foreign direct investment.

Ninh Thuan grapes given VietGap certificate

Twenty eight groups of grape growers in central Ninh Thuan province, have received the Viet Nam Good Agricultural Practices (VietGAP) certificate for their safe grapes.

The groups, which comprise 260 households growing grapevines in 66.36 hectares, took part in a grape production programme to meet VietGAP standards.

This is a part an ADB-funded project on quality of safety enhancement of agricultural products and biogas development (Qseap) which began operations in 2010.

Under the programme, participants were provided with training courses on GAP and guidelines on technologies, according to Qseap project's management board.

To ensure sustainable development, Do Trung Thu, Chairman of the Ninh Thuan Grape Association, suggested the management board connect grape growers with businesses, while strengthening the promotion of Ninh Thuan grapes in local and foreign markets.

Dong Nai draws $834m this year

The southern province of Dong Nai has seen foreign direct investments (FDI) worth over US$834 million in the past seven months, an official has said.

Director of the province's Department of Planning and Investment Bo Ngoc Thu said that as of July 18, the province had fulfilled its annual FDI target which represented a yearly increase of 17 per cent, adding that FDI disbursement during the reviewed period also saw a significant rise of 36.4 per cent to $750 million.

Deputy head of Dong Nai Industrial Zones Authority Mai Van Nhon said that these new projects were in line with the province's orientation of attracting foreign investment which prioritised high-tech, environmentally-friendly and support industries.

During the period, Japanese investors poured $57.8 million into 18 new projects, accounting for 45 per cent of the total projects. They also added $30 million to existing ones in the locality, he said.

Thu said that it was a good sign for provincial socio-economic development that most of the FDI registered in the province in seven months came for the prioritised sector.

By the year-end, the province aimed for an additional FDI of $200 million with top priority being offered to hi-tech and support industries, she noted.

Earlier, Dong Nai Industrial Zones Authority Mai Van Nhon People's Committee Vice Chairman Tran Minh Phuc said that streamlined administrative procedures and improved infrastructure facilities had helped improve the provincial investment climate and made the locality an attractive investment destination for foreigners.

In another move, the province revoked investment licences of eight foreign-invested projects worth $86 million till July, as all the projects had been delayed for more than 12 months and failed to restart despite the authority's support.

Dong Nai is home to 1,106 valid foreign-invested projects with a total registered capital of $21 billion.

Experts log potential of VN wood

The wood processing industry has a huge opportunity to expand its markets both at home and abroad in the coming years, a seminar heard in HCM City yesterday.

It has enjoyed average growth of 15-25 per cent for the past 10 years, with exports increasing every year, Nguyen Quoc Khanh, chairman of the Handicrafts and Wood Industry Association of HCM City (Hawa), said.

It earned US$5.7 billion from exports last year, a year-on-year increase of 19 per cent.

Viet Nam is among the 10 largest wooden products exporters in the world, but accounted for only 1.2 per cent of the world's total consumption of US$440 billion last year, and can increase its market share, he said.

With a population of 90.3 million, the domestic market too offered a great opportunity, he said.

Phan Chi Dung, director of the Ministry of Industry and Trade's Light Industry Department, said profits from exports remained low due to a reliance on imported wood and low value addition.

Small scale of production, high costs, and limited design capacity were among the reasons for the low value addition, he said.

Pham Minh Duc, a senior economist at the World Bank, said low labour productivity was another hurdle for the industry.

Improving workers' skills was vital and could be done by strengthening links between vocational schools and businesses and reforming training programmes to meet the industry's practical needs, he said.

Khanh said the industry wanted the Government to add it to the list of strategic industries in the next 10-20 years to provide incentives in terms of tariffs, customs, and credit to help boost exports and develop further.

Its development would stimulate the growth of supporting industries, creating more jobs, he said.

Delegates agreed that to ensure sustained development of the wood processing industry local sources of timber have to be developed and the dependence on imports reduced.

Nguyen Chien Thang, former chairman of Hawa and managing director of Scansia Pacific Company, said the Government should provide long-term loans to enterprises for acquiring modern technologies from Italian firms, many of which had closed down due to the economic crisis.

This would help them improve productivity and quality, he said.

Businesses and farmers should co-operate for planting forests so that the latter can cut down trees after 8 or 10 years instead of three as they do now for sawdust.

This would eliminate the shortage of timber, he added.

The ministry's Dung said local companies should focus on developing their brands and distribution networks and invest more in design.

Businesses should co-operate to share market information and undertake large export orders, he said.

If the industry took appropriate development measures and got support from the Government, wood product exports could increase to $20 billion in the next 5-7 years, Thang said.

They have been worth $3.35 billion so far this year, a 13.4 per cent rise year-on-year.

Viet Nam exports furniture to 120 countries and territories, with the US, China, Japan, South Korea, and the UK being biggest buyers, he said. The seminar was organised by Hawa, the Viet Nam Chamber of Commerce and Industry, and VPBank.

Property sector in need of financial services

Viet Nam should provide conditions for the proper development of real estate and finance such as Real Estate Investment Trust (REIT) along with real estate business projects.

"Real estate finance is still underdeveloped and not yet diversified. Lenders should develop proper risk assessment methods and real estate finance products to govern the risk associated with properties and the market," said Can Van Luc, Deputy General Director of the Bank for Investment and Development of Viet Nam (BIDV).

Luc told a seminar on "Managing the real estate market and the role of financial institutions: Japan's experience and policy implications for Viet Nam" held in Ha Noi yesterday that financial institutions have been playing the important role of providing financial resources to the market, even under adverse market conditions, especially from soaring non-performing loans (NPLs) and the declining credit growth rate.

"In Viet Nam, banks provide major capital resources while other financial institutions including investment funds, pension funds and insurance companies provide rather limited funding," he added.

As of December 31, 2013,real estate loans amounted to around VND262 trillion (US$12.5 billion), accounting for 8 per cent of the total outstanding loans, while the budget spending for basic construction stood at VND77 trillion ($3.67 billion).

More than 65 per cent of the collateral was real estate though the bank's property loans have not been significant.

In addition, the spill-over effect of the market has been large and related to many economic sectors including construction, material manufacturing, design consultancy, labour and households, despite the fact that its market value accounted for just 5.4 per cent of the country's GDP last year.

"With all of these features, an effective and sound management toward the market is critical for Viet Nam's economy," he added.

Nguyen Manh Ha, director of the Construction Ministry's House Management Department said, though the property market was established in the early 1990s, some remarkable achievements have been recognised. Products have become more diversified especially in the housing segment while prices and transactions have been conducted on a market-oriented basis.

Ha said the sector has attracted a huge amount of FDI. Statistics from the Ministry of Planning and Investment showed that there have been 407 projects with about $49 billion registered capital in the market so far, accounting for 21 per cent of the total.

"However, the market has faced numerous shortages and has also witnessed periods of too hot or freezing statuses," he said, adding that property investment lacked planning, transparency and professionalism.

Real estate prices were much higher than people's average incomes.

That was the reason why, until 2013, there was surplus supply in most of the market segments that caused prices to fall with many socio-economic consequences.

Sharing the experiences of analysing factors that have led to the real estate bubble economy, its crash and the prolonged economic crisis in Japan from a macro aspect and a micro aspect at financial institutions, Hara Takashi, a specialist at the Japan International Co-operation Agency (JICA) recommended that Viet Nam be imparted certain lessons to resolve the situation.

He said, what Viet Nam should understand about market features is that a bubble economy would not last for long and would definitely burst.

"Excessive optimism should be avoided and never believe that the market will continuously rise so that borrowers can keep borrowing in the hope of rising profits. Lenders should, therefore, not believe that prices keep rising and must avoid over-pricing the real estate collateral," he said.

At financial institutions it did not seem so easy to identify and take prompt action regarding the real estate bubble from a "bottom-to-top" approach, he added.

The country should improve its credit monitoring mechanism. Experiences showed that a low standard on NPL and lack of transparency were among the factors that led to ineffective monitoring.

Experts also suggested that Viet Nam should establish an independent centre for assets including property pricing and a centre for real estate market information and forecasts.

In addition, it should also improve the business environment and reduce administrative procedures as well as expand the room for foreign investors in the property sector.

The event was jointly held by BIDV and Japan's Sumitomo Mitsui Trust Bank (Sumi Trust) with an aim to share solutions and upcoming policy orientations. It also discussed Japan's experience in tackling the impact of a bubble economy on the real estate sector.

Da Nang port handles record volume of containers

Da Nang port in the central city of Da Nang handled 23,000 twenty-foot equivalent units (TEUs) of containers in July, the highest ever recorded so far, representing a year-on-year rise of 42 percent.

The figure raised the total volume of containers the port processed over the past seven months to 127,700 TEUs, up nearly 44 percent on an annual basis.

The port is targeting to handle 220,000 TEUs by the year’s end, which could be reached given it has pumped heavy investments in building infrastructure, modernizing equipment, training human resources and bettering services.

Under the seaport development plan until 2020, Da Nang port will build a new wharf designed for handling container vessels of 3,000-5,000 TEUs.

The port is part of the logistics supply chain in the Central-Central Highlands region.-

Ca Mau focuses on developing clean shrimp materials

Shrimp breeders and processors in the southernmost province of Ca Mau have joined hands in developing clean raw materials for processing and export.

Under a programme hosted by the provincial Association of Seafood Exporters and Producers, breeders are responsible for supplying clean shrimp materials and pledge not to sign contracts with many factories at the same time. Meanwhile, enterprises commit to purchasing all materials they have ordered before.

The association will act as an intermediary to ensure breeders and businesses fully implement their commitments for mutual benefits, said the association’s General Secretary Ly Van Thuan.

To date, 33 out of the 37 local firms have got connected with farmers.

Ca Mau boasts 290,000 ha for shrimp breeding, the largest area in the country. Its frozen shrimp products have been shipped to over 40 countries and territories, bringing home over 1.1 billion USD per year.-

2.5 bln USD of foreign investment flows into Tay Ninh

Foreign businesses invested some 2.5 billion USD in the southern province of Tay Ninh in the first seven months of this year.

Of the foreign-invested projects, 176 became operational, creating jobs for nearly 100,000 local people.

Local industrial and economic zones have attracted 151 projects with a registered investment of over 2 billion USD. Meanwhile, 16 other projects worth 22.1 million USD have been implemented in six industrial complexes.

The production of foreign-invested businesses has so far accounted for 41 percent of Tay Ninh’s industrial production value and they have added 34 million USD to the State budget, making up 5.3 percent of local contribution.

However, the disbursement of foreign investment has remained low, only reaching over 50 percent of the registered capital.

In addition, the implementation of foreign-invested projects has been very slow. For example, the Moc Bai border gate economic zone has 17 registered projects but none of them has been implemented while only one out of nine registered projects in the Xa Mat border gate economic zone is underway.

By employing a host of measures such as streamlining administrative procedures, bettering infrastructure, and opening more vocational training courses for locals, Tay Ninh aims to attract an additional 1.1 billion USD of foreign investment and raise the disbursement rate to 70 percent from the current 50 percent between now and 2015.

Tay Ninh, together with nearby Ho Chi Minh City, and Dong Nai, Ba Ria-Vung Tau, Binh Duong, Binh Phuoc, Long An, and Tien Giang provinces, forms the southern key economic region.

Japan calls for closer economic tie-ups with Vietnam

Senior Japanese officials have called for stronger economic partnership with Vietnam , delivering hope to work together in developing sea-based economy, among other fields.

They made the call at working sessions with head of the Party Central Committee’s Economic Commission Vuong Dinh Hue who is currently on Japan visit from August 5.

He held working sessions with Vice President of the Liberal Democratic Party Masahiko Komura; Chairman of the Lower House Budget Committee Toshihiro Nikai; special economic policy advisor to Prime Minister Shinzo Abe Etsuro Honda; chief of the Financial Services Agency’s Supervisory Bureau Kiyoshi Hosomizo; Deputy Minister of Economy, Trade and Industry Yoshihiko Isozaki; and President of the Japan International Cooperation Agency Akihiko Tanaka, among others.

The Japanese side expressed hope to promote bilateral tie-ups across agro-forestry-fisheries, automobile manufacturing, finance - banking, industry and trade, possibly via the training of Vietnamese technical graduates in Japan and encouragement of Japanese investment outflows.

They called for the realisation of the Vietnam – Japan joint statement signed by President Truong Tan Sang and Prime Minister Shinzo Abe, and other agreements between relevant agencies.

Hue ’s visit, till August 10, is to strengthen Vietnam – Japan comprehensive strategic partnership and learn about Abenomics economic model, its monetary, fiscal and economic growth policy.

During field trips to Kanagawa and Fukuoka prefectures, the Vietnamese delegation toured Nissan Motor, Sumimoto and Sozitzu companies.

Kanagawa is among six prefectures designated as a broad strategic special zone, as part of Shinzo Abe's growth strategy designed to invigorate private-sector investment - the "third arrow" of his "Abenomics" policies.

Its economy is now worth over 300 billion USD while Fukuoka generates more than 160 billion USD in annual economic value.

Seven-month state budget collection up 14.4 percent

State budget collection in the first seven months of this year was estimated 497.36 trillion VND (about 23.4 billion USD), an increase of 14.4 percent over the same period last year.

The amount represents 63.5 percent of the whole year’s estimate, according to the Ministry of Finance.

In July, the ministry signed seven loan agreements worth over 1.1 billion USD.

The ministry completed negotiations and inked 16 loan and assistance agreements with a total committed value at over 2.26 billion USD.

In the first half of this year, the country’s total budget collection reached a year-on-year increase of 14.5 percent to over 335 trillion VND (15.7 billion USD).

Over 1,300MW of electricity to be added to national grid

Eight power turbines, designed to generate 1,378MW of electricity, are running this month, said the Electricity of Vietnam.

The turbines are from Ngoi Phat, Nam Na 2, Song Giang 2, and Dong Nai 2 hydropower plants and Vung Ang 1 and Vinh Tan 2 thermo-power plants.

During this month, the National Power Transmission Corporation will speed up the installation tempo of the 220kV Van Tri – Chem transmission line and several others.

A few power plants will also undergo repair and upgrade.

By late 2013, hydropower plants accounted for 48.78 percent of the nation’s total power capacity and 43.47 percent of the national power generation, revealed the Ministry of Industry and Trade at a conference in Hanoi on August 6.

The nation now has 284 hydropower plants running with a total capacity of 14,698MW. As many as 204 plants are under construction and expected to become operational by 2017.

The ministry will issue a set of national technical standards for hydropower projects in the time to come to ensure safety, said Minister Vu Huy Hoang.

A stricter scrutiny will be made when it comes to survey, design, consultancy, construction, and inspection of hydropower facilities, he stressed.-

Samsung Vina boosts home appliances business

After great success in smartphone, television and mobile devices operations on the local market, Samsung Vina late last week launched a new campaign to promote its home appliances like refrigerators, washing machines and air-conditioners.

In the campaign, the firm introduced its flagship products like refrigerators, washing machines with smart wash, and air-conditioners with triangular design for more powerful cooling. Those hi-end products are imported from Samsung factories outside Vietnam, but in the near future they will be made at Samsung’s plants in Vietnam.

Samsung believes consumers on August 4 feel that their homes and everything in it is an extension of themselves.

The “This Is Living” campaign is not only a reflection of this spirit, but also captures the essence of the product innovations from Samsung. The food showcase refrigerator helps the user organize their food for easy access. The smart washing machine has an auto optimal wash for effortless cleaning. The triangular air-conditioner has a bigger fan inside that enables more air flow.

Speaking about the campaign, Kim Cheol Gi, president of Samsung Vietnam, said, “The modern Vietnamese consumer has made giant strides in their quality of life, and is keen to reflect that progress and achievement in how they live, work or play. We at Samsung acknowledge and appreciate that spirit through our ‘This is living’ campaign, while conveying the message that our home appliances are a perfect complement to this spirit and aspiration.”

Thaco sells out 15 Peugoet 208 and 508 cars

Truong  Hai Auto Corporation, aka Thaco, has said that 12 completely built-up Peugeot 208 and 508 cars shipped to Vietnam for marketing have been sold out within just 15 days.

The Peugeot 208 hatchback is offered at VND948 million in the local market and the Peugeot 508 sedan at VND1.575 billion.

Thaco expects Peugeot 208 may take the lead in the high-class hatchback segment thanks to its compact, luxurious and chrome-plated features. In particular, its engine is produced under the cooperation between Peugeot and BMW.

Peugeot 508 sedan is seen as a representative of the Peugeot brand in the high-class segment with sales reaching over 20,000 units globally in just two years after its launch.

Thaco has taken three models of Peugeot to the local market – Peugeot 208, Peugeot 508 and Peugeot 408. In August this year, the auto firm will display Peugeot 408 Premium equipped with innovative technology and more convenient features.

Bui Kim Kha, general director of Thaco PC, an arm of Thaco Group, said aside from the incoming shipment of Peugeot 208 and 508 cars, the company would import two other models of Peugeot namely RCZ sports and Peugeot 5008 multi-purpose vehicles this August.

Peugeot is the fourth European brand to be present in Vietnam.

Thaco now has seven showrooms nationwide displaying Peugeot cars including two in the south, four in the north and one in the central region. The figure is expected to reach 13 by the end of this year.

Consolidated SCB reports business improvement

Saigon Commercial Bank (SCB) has announced that it obtained VND123 billion in pre-tax profit in the first six months of this year, a strong rise against late last year.

The profit after deductions of taxes and reserve funds for overdue debt risk was lower than other lenders but jumped 37.7% against late 2013, when SCB posted profit for the first time after its consolidation in late 2011.

This is a positive sign for SCB, which was consolidated by merging three poor-performing lenders – Tin Nghia, former SCB and Ficombank.

According to a report announced last Friday, credit growth contributed significantly to the profit. SCB reported total outstanding loans of nearly VND96 trillion, up 7.8% from early this year.

Since early this year, SCB has focused on extending loans to priority sectors and making proper preferential policies for borrowers. The bank has given new loans worth nearly VND1.5 trillion to individual and corporate customers, including VND476 billion for importers and exporters, the report said.

SCB has also sped up debt settlement and recovery, and credit quality control. The bank has also restructured debts and strictly followed debt classification and risk reserve fund establishment rules.

Ending June, the bank’s mobilization amounted to nearly VND165 trillion, up 12.1% from early this year and meeting 56% of its 2014 plan. Its money transfer revenue reached over VND15 trillion while 19,900 new automated teller machine (ATM) cards and over 4,700 new credit cards were issued.

Japan’s Audio-Technica debuts in Vietnam

Audio-Technica, a Japanese leader in audio technology, late last week made its first public appearance in Vietnam through the introduction of its premium headphone products, after around five years of surveying the local market and looking for distributors.

The products are exclusively distributed by its local partner Syn Style Ltd, a key retailer of many other hi-end audio brands and accessories, including Belkin, Skullcandy, Beats by Dr. Dre, Elecom, Sennheiser and Cygnett.

Tran Phuong Tam, managing director of Syn Style Ltd, said that in the initial phase, Audio-Technica premium headphone products would be made available at many retail stores across big cities, including HCMC, Bien Hoa, Hanoi, Danang and Can Tho. The concept store carrying other brand products is in the pipeline and slated to be open in foreseeable future.

“Audio-Technica brand has long been known among the local aficionados, but the official brand representation and customer service had yet to be set up. Our partnership is slated to fill that gap,” said Tam.

Vincent Chan, managing director of Audio Technica (S.E.A) Pte.Ltd., said Vietnam is a important market for his company.

Founded in 1962 in Tokyo, Audio Technica is an award-winning audio design and manufacturer. The Japanese company was one of the earliest manufacturers of headset microphones for stage use, starting in 1990. It has been supplying all the headphones and microphones for the Grammy Awards for the last 10 years as well as completely kitting out TV shows like the American version of Big Brother, Deal or No Deal, The Rock and Roll Hall of Fame inductions, as well as the Olympic and winter Olympic games in 1996, 2000, 2002, 2004, 2008, 2012.

VinaPhone’s 3G speed to rise six-fold

Mobile carrier VinaPhone has announced its success in boosting the 3G transmission speed to 42Mbps, six-fold higher than the current level.

Such a speed allows 3G subscribers to download eight MP3 songs measuring 5Mb each within one second, and stream videos in true high-definition onto their mobile phones using this 3G service.

The upgrade of 3G transmission speed will benefit 3G mobile phone and EZcom subscribers of VinaPhone.

The test-operation of the faster 3G service has taken in Hanoi, Danang City and HCMC. The mobile carrier has plans to make it widely available at its 13,000 base transceiver stations for 3G services nationwide early next year.

VinaPhone is now working with equipment suppliers to test the 3G transmission speed whether it can be increased to 84Mbps.

Given saturated demand for normal phone and SMS services, VinaPhone looks to expand 3G and value added services whose demand is growing.

Vietnamese banks struggle to raise capital

Vietnam’s small and big banks alike have been trying to raise their registered capital to increase their financial capacity and/or avoid being merged and acquired, but many have failed.

In 2012 DongA Bank was approved by the State Bank of Vietnam (SBV) to raise its registered capital from VND5 trillion ($237 million) to VND6 trillion ($284 million) by selling new shares to existing shareholders at a par value of VND10,000/share (US cent 47.4).

But by the end of last year, when the permission order expired, the shareholders had not submitted or pledged enough money, so the bank voided the result of the issuance and returned the money to the share buyers. The bank also failed to find foreign strategic investors.

Much bigger Eximbank has also faced difficulties raising capital. In 2013 the bank planned to raise its registered capital from VND12.355 trillion ($585.5 million) to VND13.11 trillion ($621.37 million) using profits from that year’s business. But by the end of the year the bank’s profits only reached 28 per cent of the target ($39.24 million compared to the planned $142.2 million). Eximbank has since given up.

For a few years now VietABank has been trying to sell off 40.2 million shares to raise its registered capital from VND3.5 trillion ($165.87 million) to VND3.92 trillion ($184.92 million) by paying share dividends and issuing bonus shares, but has yet to succed.

The reason banks are struggling to sell shares is that in most cases the market price of their shares are too low, sometimes under the par value of VND10,000/share, as in the case of VPBank, Maritime Bank, and DongA Bank. The low price makes the shares unattractive to most investors.

The pressure to raise registered capital is particularly high on banks with registered capital of between VND3 trillion ($142.2 million) and VND4 trillion ($190 million), as the SBV plans to merge small-scale, weak banks to reduce the country’s total from the current 30 to around 14-17.

Exclusionary VAT regulations trouble SMEs

A circular (219/2013) that took effect on January 1 this year guiding the implementation of the Law on Value-added Tax (VAT) is causing a number of inconveniences for firms, particularly small-sized businesses, said lawyer Vu Xuan Tien, chairman of Value of Finance and Management Consulting Company.

The circular, issued by the Ministry of Finance (MoF), stipulates that only firms with annual revenue of at least VND1 billion ($47,400) are eligible for a VAT deduction.

The new regulation makes it more expensive for small and medium firms to do business, and this endangers their survival and growth.

According to the MoF, the purpose of the VND1 billion revenue threshold was to prevent the establishment of firms that do not do any real business besides just buying and selling fake VAT bills, resulting in losses to the state budget.

Another reason for the threshold according to the MoF is there are far more applications for VAT deductions than before, while the headcount at the government tax department has stayed the same, which has resulted in a significant overload.

“The threshold has had no visible effect on the establishment of firms that buy and sell fake VAT bills, but is already causing difficulties to legitimate ones,” Tien said.

Circular 219 also includes other complicated conditions for VAT deduction. For example, newly established firms buying fixed assets and machinery, not including cars with fewer than nine seats for firms operating in transport and tourism, can only apply for a deduction if such assets’ value exceeds VND1 billion.

It follows that service companies such as consulting and law firms are rarely eligible because they have no need for fixed assets valued at VND1 billion and up.

According to the CIA’s world factbook, Vietnam’s tax/GDP ratio was 25.2 per cent in 2013, higher than that of most countries in the region.

Firms in Vietnam spend 872 hours a year, or 100 working days, on tax declarations and payments, according to the 2013 Doing Business report released by the World Bank, four times the average of the Asia Pacific. Prime Minister Nguyen Tan Dung recently asked for reforms to reduce the number to 300 hours.

Many local firms to join Singapore furniture fair next March

Many Vietnamese furniture makers are expected to participate in the International Furniture Fair Singapore (IFFS) 2015 scheduled for March 13-16 next year in Singapore, the organizers said at a press briefing on July 31.

According to the Vietnam Design Association, HCMC-based PNY Investment Trade Service Co. Ltd., and International Furniture Fair Singapore Pte Ltd, organizers of IFFS 2015, some two-thirds of Vietnamese firms joining the recent IFFS 2014 have re-registered for the 2015 event, promising to raise the area of Vietnam’s stalls by 120% compared to this year.

In mid-March this year, 28 local enterprises participated in the IFFS, occupying a total area of 1,200 square meters and bringing in US$1.2 million worth of orders at the fair.

According to the organizers, more than half of the total area of six hectares set for the fair has been reserved.

The 32nd ASEAN Furniture Show (AFS) 2015 will be held in conjunction with IFFS 2015. As a leading exhibition in Asia, AFS along with IFFS has been seen as a bridge to help enterprises in the region enter global markets.

Products put on show at the fair next year include indoor and outdoor tables and chairs; furniture for bedrooms, kitchens and living rooms; handicraft products; decorative lights; mirrors; paintings and photo frames; and equipment for bathrooms, among others.

Dong Nai authority shutting down inactive projects

In just the first seven months of this year, Dong Nai has revoked investment licences from eight FDI projects with total registered capital of $86 million, 99 per cent of which belongs to five projects located in industrial zones, reported the Dong Nai Department of Planning and Investment.

Deputy director of the management board of Dong Nai’s industrial zone authority Mai Van Nhon confirmed that all of the projects have been delayed for more than 12 months and failed to restart despite the authority’s reminders.

“We are considering revoking the investment licences from another 47 12-month overdue projects, which authorities have deemed to make little contribution to the province’s socio-economics in the near future,” he added.

Some delayed projects lack even the adequate financing to build offices, which has made it difficult for the authority to contact their representatives.

A visit to the Bien Hoa 1 industrial zone shows the land for the Nippon Vina joint venture being used for car parking, and no contact information is available.

Another example is the Dinh Quan industrial zone-based Kyung Rim Vina Ltd. Although it signed an initial contract with an infrastructure firm, the company returned its land and stopped its operations as of May 2014, but hasn’t yet closed its tax code.

According to the management board of Dong Nai’s industrial zones, many FDI firms are neglecting to pay tax and social insurance. For example, Dong Yang Inc. Ltd, based in Nhon Trach industrial zone, has failed to pay taxes of VND18 million ($860) and VND28 million ($1,300) for social insurance.

Nhon Trach 1-based C&H Vietnam Ltd is also shut down, but still has a tax code and owes more than VND800 million ($38,000) in social insurance.

In 2013, Dong Nai revoked investment licences from 17 of 30 non-operating FDI firms. “Dong Nai’s investment policy is to fully support productive projects that make contributions to the provincial budget and create jobs for local people,” Nhon underscored.

Businesses backed for smoother operation

A number of solutions to help businesses develop strategy for better performance have been under discussion at the Vietnam CEO Summit in Ho Chi Minh City.

Themed “Reshaping strategic priorities for Vietnam’s large enterprises in the next stage 2014-2016”, the August 5 summit was attended by 300 representatives of businesses.

According to experts, the Association of Southeast Asian Nations (ASEAN) is viewed as a promising region with export turnover posting an annual average growth of 10 percent.

Foreign direct investment into the bloc registers an annual average rise of 15 percent, mainly in construction, banking, real estate and manufacturing.

Participants described Vietnam as a promising market in Southeast Asia with its strength in export capacity, competitive labour force and eye-catching tourist destinations.

Vu Minh Khuong from the Singaporean National University said the outlook for Vietnam’s economy will be brighter between 2014 and 2016 with low inflation rate and stable macro economy.

Local leading businesses were suggested adjusting their strategies in a more flexible manner, and enhancing their competitiveness, helping them adapt to changes in the country as well as the region.

Sharing experience in building the business strategy, J.D Bindenagel from the Boston Global Forum, said the risk management strategies and adaptation to multilateral negotiations are essential to draw investment and reap fruits in the international market.-

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR