BUSINESS IN BRIEF 14/11 Cut in gold jewellery export tax proposed The Ministry of Finance is proposing the cutting of the export duty on gold jewellery from 25 to 30 percent to 0 to 2 percent. Under the ministry's draft circular, gold jewellery that is below 95 percent in purity will be exempted from the tax while those with more than 95 percent purity will be assessed a two-per cent tax. Other Asian countries such as Thailand, India and China have trimmed down their tax on gold jewellery exports to zero, so their gold jewellery industry always has a high export value. For example, Thailand has an export turnover for gold jewellery of about 3 billion USD per year while the figure is merely 500 million USD for Vietnam. Meanwhile, analysts say Vietnamese enterprises are facing huge difficulties because they have not made appropriate investments in production and cannot control input material sources. As a result, they cannot compete with foreign companies in matters of pricing. According to current regulations, gold jewellery companies have to buy gold for roughly 4 million VND per tael, which is higher than the average world price for the precious metal. They also cannot borrow money from banks to make jewellery. Industry insiders reveal that domestic enterprises also find it difficult to export their products because of the high export tariff and high cost of materials. Domestic gold jewellery is also forecast to face bigger challenges when the country opens its gold market in 2018, with no import tariff. According to the Vietnam Gold Business Association, with a 3.5-billion USD turnover and a 25-percent annual growth rate, the domestic gold market has become quite attractive to foreign investors. Anticipating the huge difficulties, a number of jewellery companies have left the market. It is estimated that roughly 70 percent of 3,000 enterprises have either been dissolved or have stopped production to date. Panasonic opens new factory in Binh Duong Panasonic Eco Solutions Vietnam Co., Ltd. is opening a new factory within the Vietnam – Singapore Industrial Park II located in southern Binh Duong province, as part of their plan to expand production of wiring devices and circuit breakers. The new manufacturing facility, which cost VND396 billion (approximately US$18.7 million), has a planned production capacity of 30 million units of wiring devices and 5.15 million units of circuit breakers in the first year. Fueled by recent rapid economic development, Vietnam’s construction industry is booming, creating increased demand for equipment and supplies. According to Panasonic Eco Solutions Vietnam President Takashi Ogasawara, the company aims to supply these needs and support the continually growing economy by expanding its production of electrical equipment. The factory is expected to provide 480 local employment opportunities. German businesses keen to invest in Ha Nam Representatives of 11 businesses from the German Federal State of Sachsen on November 11 met with provincial leaders from Ha Nam province to discuss trade and business opportunities. Dr. Thomas Richter, vice president of Saxony Economic Development Corporation, said businesses, especially small and medium-sized enterprises (SMEs) have successfully cooperated with Vietnamese enterprises in a number of fields. They have been particularly prosperous in fields such as information technology, machinery, manufacturing and medical equipment, Richter said. At the meeting, Sachsen State businesses expressed their desire to boost cooperation with local enterprises in the garment and textile, trade, automation, medical technologies, and construction industries. Mai Tien Dung, Chairman of the Ha Nam province People’s Committee affirmed the province will devise proper policies, improve infrastructure facilities and streamline administrative procedures to create an open and favourable investment environment. Saigon Co.op makes Asia Pacific top 10 retailer list Retail Asia magazine on November 10 unveiled the selection of Saigon Commercial Cooperative Union (Saigon Co.op) and The Gioi Di Dong (Mobile World) as among the top 500 Asia-Pacific retailers at an awards ceremony in Singapore. This is the 11th year Saigon Co.op has been honoured. Notably, this year Saigon Co.op is the only representative of Vietnam to be selected as a top ten retailer in the Asia-Pacific region. The Gioi Di Dong Investment Joint Stock Company has been cited a top 500 Asia-Pacific retailers for five years running. This year, it ranked in the 409th position among regional retailers. As of the end of 2013, the company had a total of 219 mobile phone stores across the country with VND8,232 billion in gross revenue. Launched in 2004, winners of the annual Asia-Pacific Top 500 Retail Awardshave been selected based on surveys in 14 regional countries. Work starts on construction of food industry centre in Nghe An Work began on November 11 on the construction of the Northern Masan Food Industry Centre in the central province of Nghe An. Covering 6.33 hectares in the Nam Cam Industrial Zone in Nghi Xa commune, Nghi Loc district, the project has an initial investment of VND1.2 trillion (US$56.4 million). The project consists of factories specialising in producing instant food, spices, and beverages. Once being operational, the factories will generate jobs for over 1,100 local people. Founded in 1996, the Masan Consumption Joint Stock Company of Masan group is one of the largest private companies in Vietnam with capital value about US$1.5 billion, specialising in producing food and drinks. Some main products of the company are fish sauce, chili sauce, instant noodles and instant coffee. US economist hails Vietnam’s economic management Vietnam’s growth prospects are very good and its government’s management of the economy has been making important positive progress, Bill Witherell, chief global economist at US-based Cumberland Advisors, has said. Bill Witherell highlighted the country’s education expansion and training initiative to reduce skill shortages and hailed its equitisation steps and relaxed regulations to permit the participation of foreign companies in domestic enterprises as positive improvement in the investment climate. He suggested the reform of the state-owned firms be accelerated and of state-owned banks to be raised to international standards. For US investors, the resistance to US demand, including workplace standards and trade union membership, remains a problem standing in the way of finalisation of the Trans-Pacific Partnership (TPP), which is expected to provide a helpful boost to future exports, he noted. According to Bill Witherell, Vietnam’s GDP target of 5.7 percent set for 2014 will be attainable and the figure is expected to hit 6 percent in 2015, and between 6-7 percent in the following several years with continued strong inward investment helping drive export growth. Vietnam, Finland aim for higher agro-fishery trade A seminar on November 11 in HCM City discussed opportunities in the Finnish market and alternative ways to connect Vietnamese and Finnish businesses said Claudio Karjalainen, general manager of the Finnsea Consulting Company. Finland is a highly lucrative export market for the Vietnam agro-fisheries sector and a gateway to the Russian and North European markets, Karjalainen said adding that each year the country imports more than EUR400 million worth of agro-fishery products. Vietnamese agro-fisheries exporters have historically comprised just a 4% market share, leaving ample opportunity for future growth. To pierce the demanding market, experts at the seminar said local businesses should conduct a comprehensive market analysis and study the tastes and preferences of local consumers and assess their product’s competiveness. In addition, they suggested Vietnamese businesses could make inroads into the market through popular products such as canned and frozen food products, especially, basa, tuna, and shrimp. Nguyen The Hung, deputy director of the Vietnam Chamber of Commerce and Industry (VCCI), HCM City branch said it has formulated a project to support exports of agro-fisheries products to the Finnish and North European market under the sponsorship of the Finnish Government. The seminar aimed to provide businesses with market information, consumer demand in these markets and strengthen online support tools to help businesses seek partners effectively. According to the VCCC-HCM branch, key exports to Finland have been coffee, rubber, footwear, and garments and textiles while imports from the market have been machinery, equipment, telecoms, plastics and materials. The two-way trade turnover between the two countries reached more than US$171 million for the first eight months of the year. Enhancing capacity for trade unionists at industrial parks The Vietnam General Confederation of Labour (VGCL) and the Australian People for Health, Education and Development Abroad (APHEDA) organised a workshop in Hanoi on November 11 to share training methods and programmes to help enhance the capacity of trade unionists in industrial parks and processing zones. Identifying the training of trade unionists as a key task and prerequisite for a number of other activities, the VGCL devised a strategy and issued a resolution on the improvement of the quality of personnel training courses in 2010-2020, Vice President Tran Van Ly said. Director of the APHEDA Office in the Mekong Delta Sharan Kumar KC said while the number of trade unionists in the world is relatively low that in Vietnam the number is on the rise. He expressed his hope that Vietnamese trade union organisations will continue to expand their membership in the near future. Participants at the workshop agreed that labour disputes are still quite common in industrial parks and processing zones, requiring the involvement of trade union officials to mediate. With 8.3 million members at present, the VGCL is expected to increase its membership to 10 million by 2018. Established in 1984, APHEDA acts as the overseas aid agency of the Australian Council of Trade Unions. Since 1993, the organisation has implemented a number of trade union projects in Vietnam with a focus on negotiation skills, gender equality, and HIV/AIDS prevention and control. Investment and business seminar held in Egypt The Embassy of Vietnam on November 10 sponsored a seminar in Egypt aimed at promoting investment and business opportunities for the nation’s agro-forestry and fisheries sector. At the seminar, a Ministry of Industry and Trade (MoIT) representative updated those in attendance on the nation’s political and business climate and answered queries. Deputy Director of the MoIT’s South-West Asia and Africa Department Hoang Duc Nhuan in turn said the two-way trade turnover between the two countries has been steadily trending upwards over recent years. In the first six months of this year alone, it reached nearly US$174 million, of which Vietnam exports to Egypt registered US$162 million and imports from Egypt tallied in at more than US$11 million, Nhuan said. Key exports to Egypt included seafood (tra and basa fish, frozen shrimp), fibre, pepper, cashew nut, automobile spare parts, machines, equipment, chemicals, rubber, telephones and components. Meanwhile the country mainly imported garment and footwear materials, iron ore, oil and gas, pharmaceuticals, milk, fibre and vegetables and fruit. Nhuan said the MoIT and the Embassy in Egypt have been actively carrying out trade promotion activities in the African market, such as organising seminars and business forums. Nhuan also extended an invitation for all Egyptian businesses to attend Vietnam Expo in April and October of next year. Honda Vietnam inaugurates third motorcycle plant in Ha Nam The Japanese-funded Honda Vietnam inaugurated its third motorcycle factory in northern Ha Nam province on November 10, which is expected to become one of the most technologically advanced in the field in the world. Covering over 270,000 square meters at Dong Van II industrial park, the 120-million-USD factory will comprise seven workshops capable of producing 500,000 units per year. The plant’s entire production procedure fully meets the global and Vietnamese highest environmental standards to create high-quality and environmentally friendly products. Honda Vietnam started to produce motorcycle spare parts in this plant in March 2014, with 1,450 units a day. In the first phase, the plant is able to manufacture 1,000 motorcycles, mainly scooters, per day. The plant employs nearly 1,300 local work-hands and generates indirect jobs for thousands more. At the inaugural ceremony, Deputy Prime Minister Hoang Trung Hai said Honda’s construction of its third plant after 17 years of operation in Vietnam vividly manifests the investment efficiency of Japanese businesses in the host country. He noted that Japan now tops 101 nations and territories pouring direct investment into Vietnam, with 2,410 projects totalling 36.3 billion USD in value. Vietnam and Japan established bilateral strategic partnership for peace and prosperity in Asia in March this year. The Southeast Asian nation is offering brilliant investment opportunities for foreign investors, including those from Japan , especially in the field of infrastructure building under the public-private partnership (PPP) form such as transport, electricity, and water supply. The Deputy Prime Minister said he hopes as a leading business in Japan and the world, Honda will continue to bridge Japanese and Vietnamese business links and help drive the two countries’ economy. Ha Nam , a dynamic province in attracting foreign investment, will work harder to persuade more Japanese businesses to invest in the locality, Hai said. Egyptian firms keen on Vietnam’s seafood, agricultural products Representatives of around 30 Egyptian companies have expressed their wish to seek Vietnamese partners as well as increasing the import of agricultural and aquatic products from the Southeast Asian country. Speaking at a workshop on the Vietnamese market’s potential in Cairo on November 10, General Director of the ALMEN Export Company Ahmed Elsheikh said that his company has established partnership with a number of Vietnamese businesses in Hanoi, Ho Chi Minh City and Vinh city of Nghe An province for a decade, and imported 3 million USD of goods each year. Meanwhile, Chairman of Arabian Home (AH) Ibrahim Mossalm said he is seeking partners in Vietnam for the transfer of harvesting technology. He highly valued Vietnamese goods, saying that Arabian Home is importing rice from Vietnam and eyeing the upcoming Vietnam international seafood exhibition (Vietfish) to introduce its advanced technology. Vietnamese Ambassador to Cairo Dao Thanh Chung briefed participants on Vietnam’s achievements in its renewal process, the strength of the agricultural sector and potential for cooperation between the two countries. Hoang Duc Nhuan from the Vietnam Ministry of Industry and Trade updated the attendees on the country’s key agricultural and aquatic products. In the first nine months of this year, Vietnam’s export turnover to Egypt rose nearly 71 percent to over 282 million USD, of which seafood made up 20 percent, according to the Vietnamese ministry. Key exports to Egypt included frozen fish fillets, fibre, pepper, cashew nuts, and rubber. At the workshop, many businesses asked Vietnam’s ministry and relevant agencies for tighter control on the quality while taking measures against trade fraudulence. BIDV works with Eximbanka SR to support Laotian project The Bank for Investment and Development of Vietnam (BIDV) will cooperate with the Export-Import bank of the Slovakian Republic (Eximbanka SR) to provide credit for a Laotian pipeline project following a memorandum of understanding (MoU) signed by both sides on November 10. According to the agreement, the project will have an estimated investment of 200 million USD, with 85 percent collected by Eximbanka SR from European financial institutions. It includes the construction of a bonded warehouse and an oil-and-gas pipeline system running from Hon La Island in Vietnam’s central province Quang Binh to Khammouane province in Laos. PetroLao, a petroleum company of Laos, is responsible for the project and can consult with BIDV if necessary. Regional specialties introduced in Hanoi Over 100 enterprises from 40 provinces and cities will display their products at a regional specialty expo at the Royal City Vincom shopping centre in Hanoi on November 28-29. Vice Director of the Hanoi Department of Trade and Commerce Tran Thi Phuong Lan told to the press on November 11 that the event aims to promote the consumption of regional food in Hanoi and connect producers, distributors and consumers. 150 booths in six different exhibition areas will feature regional specialties, culinary art, rural markets, coffee and tea, ornamental plants and commercial trade. The two-day event will provide an opportunity for exhibitors to advertise their products and promote their regions’ cultural features. A number of side events will also take place, such as workshops on added value and brand development, a regional specialty and a trade conference to link enterprises in Hanoi with other provinces and cities. Cutting interest rates help boost growth The State Bank of Vietnam lowered interest rates on short-term deposits and ceiling interest rates on loans in a bid to boost bank loans, the English language version of the Nhan Dan (People) newspaper reported. However, both enterprises and commercial banks still face many difficulties to be able to secure loans or spur credit growth, according to the newspaper. Chairman of Thuan Phuoc Seafood and Trading Corporation Tran Van Lanh said his company got access to bank loans at the rate of 6 percent and this helped boost his business growth. To enjoy such a low rate, a company must have a good record and is able to prove to banks the feasibility of their business plans, Lanh explained. However, according to a recent survey, not many SMEs in Da Nang can borrow capital due to banks' strict lending requirements. Director of Phuoc Tien General Trading Company Do Anh Tuan said his company was always in need of capital to expand its business but was unable to borrow low-cost loans from banks. Currently the company is borrowing at an average rate of 10.5 percent. Nguyen Thi Tuyet, Director of Hoang Khuyen Trading Company, a manufacturer of glassware products, said that due to their limited knowledge about procedures, many small and medium enterprises were unable to present their business plans to banks. They also did not have big assets to use as collateral so they were unable to access bank loans. In addition, most enterprises which have yet to repay their debt, are not able to ask for more loans at lower rates. Deputy General Director of Vietcombank, Nguyen Danh Luong said that in line with the central bank’s directive, Vietcombank has reduced both deposit and lending rates. For priority sectors, Vietcombank cut the rate on short-term VND loans from 8 percent to 7 percent and capped the rate on medium and long-term loans at 10 percent. According to Dr. Nguyen Tri Hieu, although a low interest rate is not a decisive factor, it is definitely a motivation for enterprises to borrow more, thereby accelerating credit growth. Dr.Tran Hoang Ngan, a member of the National Financial and Monetary Advisory Council, said that enterprises were still struggling to secure medium and long-term loans. Therefore, if banks could slash their interest rates further, it would encourage enterprises to borrow. Ngan said enterprises wanted interest rates on medium and long-term loans to be lowered to 5-6 percent, or 7 percent at the maximum so that they could invest in new machines to manufacture products. According to Cao Sy Kiem, President of the Vietnam Association of Small and Medium Enterprises, after recent cuts, interest rates would no longer be a barrier to enterprises’ operations and what was needed now was a policy to boost aggregate demand so that enterprises could quickly reduce their inventory levels. In addition, administrative procedures also needed to be reformed, suggested Dr Kiem, adding that enterprises should re-examine their capacity and formulate appropriate business plans to fully utilise the new policy. Deputy General Director of Maritime Bank Tran Xuan Quang said medium and long-term capital was always a difficult problem for a bank because deposits were mainly short term. With short-term deposits accounting for a large proportion, if banks offer long-term loans, they will likely face a liquidity crunch in a case of instable market. Quang said that it was necessary to develop a medium and long-term capital market for enterprises in order to reduce the pressure on banks and help enterprises to be more proactive about their long-term business plans. Support industry to receive tax cuts Businesses engaging in supporting industries are expected to receive major incentives under an amendment to the existing Law on Corporate Income Tax. The National Assembly last week discussed revisions to the country’s tax laws. Under the draft revision of the current Law on Corporate Income Tax, businesses operating in supporting industries will for the first time benefit from corporate income tax (CIT) incentives. Specifically, those with new projects will enjoy a 10 per cent CIT for the first 15 years of operations with a CIT exemption for the next four years, and a 50 per cent CIT reduction over the next nine years during this period. According to the draft, products benefiting from the reduced CIT will be from the electronics, automobile, garment and textile, and footwear sectors. The list of products for supporting industries will be detailed by the government. Regarding expanded projects within the list, investors will enjoy such incentives if their project design capacity increases 20 per cent against initial capacity, and if the value of their fixed assets grows by at least VND20 billion ($952,400) after coming into operation. One of the reasons behind this move is that in order to benefit from agreements like Trans-Pacific Partnership, Vietnam-Europe Free Trade Agreement and Vietnam-South Korea Free Trade Agreement, Vietnam’s exports must have at least 60-65 per cent of their materials made in Vietnam. “It’s very good news for firms like us,” said Nguyen Tai Duong, representative of the Chinese-Vietnamese joint venture Dragon Automobile Company Limited, “because we will put our $50 million project into operation soon and will be able to seek more local suppliers easier, instead of largely importing products from China and Japan.”                  Dragon Automobile will manufacture, assemble and import assorted vehicles in the northern province of Lang Son. “The incentives will help Vietnam lure more foreign supporting industry firms. Currently, these firms are benefiting from import tax incentives, but not CIT incentives,” Duong told VIR. A source from the Bac Ninh Provincial People’s Committee said more foreign supporting industry firms were expected to come to do business in the province in the near future, thanks to the presence of Samsung and Microsoft and the new CIT incentives. “Bac Ninh is trying to develop into a modern city with many supporting industry firms and major businesses like Samsung and Microsoft,” the source said. However, according to Duong, there remained a big gap between the enactment of the CIT incentives and the application of them to enterprises. “Vietnam will not be able to develop its supporting industries if it fails to create a level playing field for firms and remove obstacles facing firms. For instance, firms can’t make profits when interest rates are current at 12.5 per cent,” he added. CIT incentives have been offered to large-scale foreign invested projects in Vietnam such as Samsung or Intel’s. For example, since it began operations in Vietnam in 2009, Samsung is entitled to a 10 per cent CIT exemption for the first four years of operations and a 50 per cent reduction for another nine years. According to the Ministry of Industry and Trade, Vietnam has only 656 enterprises making spare parts. Meanwhile, there are over 58,000 enterprises operating in various industrial sectors. Apartment buyers want quality High-end apartments segment have seen positive sales during recent months, but buyers are becoming increasingly sceptical of developers that prove incapable of delivering on their promises. High-end apartments still suffer from limited progress in terms of sales while many mid-end projects have remained unsold even following price cuts. According to Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, high-end apartments are still attractive enough to buyers. Vingroup recently saw more than 800 buyers visiting the launching for their Vinhomes Nguyen Chi Thanh project, with more than 250 buying homes. Apartments cost from VND60 to 65 million ($2,800 to $3,080) per square metre. “Through the good sale of this project we can see the demand for high-end apartments remains high,” Vo said. Vinhomes Nguyen Chi Thanh could be seen as an outstanding case in a real estate market experiencing a downturn. Vo confirmed that all other projects developed by Vingroup such as Royal City and Times City had seen good sales recently. “The problem is not that we lack high-end projects, but whether those projects meet buyers’ demands,” he added. The improved sale of some high-end projects in Hanoi underlines Vo’s comments. Sales at the Tan Hoang Minh Group’s D’. Le Pont D’or project have also seen improvements. The D’. Le Pont D’or boasts prices from VND33 to 38 million ($1,500 to $1,800) per square metre, one of the lowest prices for high-end apartment projects in central Hanoi. Other projects are sold at higher levels such as at VND60 to 70 million ($2,850 to $4,280) per square metre in The Lancaster and Discovery Complex II, or VND80 to 90 million ($3,800 to $4,280) in Hoang Thanh Tower. Despite these high prices, half the apartment stock has already been sold. According to Vu Cuong Quyet, general director of Northern Dat Xanh, liquidity in the high-end apartment market has improved remarkably recently. The reason for this improvement, Quyet said, was that due to the huge stockpile of real estate, developers exclude high-end projects from their portfolios. Hanoi had recently issued a regulation to limit high-rise buildings in the four central districts of Ba Dinh, Hoan Kiem, Dong Da and Hai Ba Trung, and around West Lake, which would lead to fewer high-end projects in the pipeline. Vo also admitted that another factor in their popularity was that their developers had paid attention to finishing all of the support facilities, in order to give buyers a perfect environment when moving in. Pham Thanh Hung, deputy chairman of Cen Group, said that location was still one of the first priorities to attract buyers, together with already completed infrastructure and facilities. MoU signed to finance Vietnam - Lao oil pipeline project The Bank for Investment and Development of Vietnam (BIDV) and the Export-Import Bank of Slovakia (Eximbanka SR) on November 10 signed a Memorandum of Understanding (MoU) on providing credit for the construction of a bonded warehouse and oil pipeline from Hon La port in Vietnam's Quang Binh province to Khammouna province in Laos. The signing ceremony took place in Bratislvava, Slovakia in the presence of Slovakian Deputy Prime Minister Lubomir Vazny and Lao Deputy Prime Minister Somsavat Lengsavad. The oil pipeline project is 100% financed by the Lao Government with an estimated capital of US$200 million. The Lao Government assigned Laos Petro Join Stock Company (PetroLao) to implement the project. BIDV was selected to conduct consultancy work for PetroLao on October 31. As a consultant, BIDV has reached an agreement with Eximbanka SR under which Eximbanka SR will arrange credit from European financial institutions for loans to BIDV and then BIDV will lend the capital to the Lao Government to carry out the project. The signing of the MoU between the two banks aimed to reach a consensus on terms related to the project and financial arrangement for the project. Eximbanka SR will take charge in mobilising 85% of the capital of the project and BIDV will raise the remaining 15%. The bonded warehouse at Hon La port has a capacity of storing 300,000 to 500,000 cubic metres of fuel products while the warehouse in Khammouane will be capable of storing 100,000 to 200,000 cubic metres. The pipeline has a total length of 290 km including 138km passing through Vietnamese territory and 152km in Laos. The project is scheduled to begin construction in the fourth quarter of 2015 and will be completed in late 2017. Footwear industry asked to make bigger strides The footwear industry needs to focus more on developing the supporting industry, training workers, and improving products and marketing to develop in a sustainable manner, a seminar heard in HCM City yesterday. Nguyen Duc Thuan, chairman of the Viet Nam Leather, Footwear and Handbag Association (Lefaso), said the footwear industry has seen strong development, becoming the country's second or third largest exporter in recent years. Almost all leading global footwear brands like Nike, Adidas, and Puma are present in the country. The industry has great potential to boost exports, especially with several free trade agreements the country is negotiating – like the Trans-Pacific Partnership, Viet Nam-EU FTA, an FTA between Viet Nam and the Customs Union of Russia, Belarus and Kazakhstan – he said. But to derive advantages from such agreements, the industry should meet certain conditions, especially local content ratio, which require it to develop supporting industries, Thuan and many other delegates said. Diep Thanh Kiet, Lefaso's deputy chairman, said 70 per cent of the leather needed for footwear and handbags is imported, and only 50 per cent of metal accessories can be sourced locally. Thus, developing the supporting industries with a focus on leather, PVC, PU, and fabric is on the agenda, he said. The industry would focus on training human resources in design and R&D, enhancing efficiency, and creating a good business environment to attract foreign investors and encourage domestic investors, he said. It is seeking investments, including in two leather production zones, a synthetic leather plant, a production zone for all kinds of outsoles in the south, a small production zone for metal accessories, and a training centre that can train 150-200 designers/pattern makers, 200-250 production managers, 80-100 engineers, and 300-500 line leaders, he said. Matt Priest, president of the Footwear Distributors and Retailers of America, said the US imported 2.32 billion pairs of footwear last year, or an average of 7.32 pairs per capita. China accounted for 81 per cent of the total and Viet Nam for 10 per cent, but China's share is declining, he said. With Viet Nam's exports rising sharply in the past 13 years, China's share is expected to reduce in the next five years to 70 per cent, and Viet Nam's to increase to 12 per cent, he said. The ratio could be even higher because of the TPP, he said. With its stable polity, a welcoming culture, competitive production advantages, "we found Viet Nam an amazing place to source for footwear," he added. The seminar also heard that many footwear producers have shifted their production base from China to Viet Nam due to higher labour costs there, an appreciation of the yuan against the greenback, and other causes. Oliver Ng of the Ever Rite Group said his company decided to move from China to Viet Nam because of currency stability, lower labour costs, productivity that is comparable with other countries, and proximity to the Chinese supply chain, and to enjoy preferences offered by existing and future trade deals (ASEAN, EU's GPS, TPP). Viet Nam's exports of footwear and handbags were worth US$10.4 billion last year, and a similar value had been achieved as of October 14 this year. The seminar was organised by Lefaso in collaboration with the Footwear Distributors and Retailers of America. Vietnam poised for Middle East investment The Kuwait Times recently ran an article about the favourable business investment in Vietnam. Here is the full text of the article. The potentials of 90 million-citizen Vietnam, as other Southeast Asian markets for Middle East investment have become ever more evident in recent years. For decade, with the growth rate registered from 5% to 7% annually, Vietnam ranks among Asia country having high and stable growth rate thanks to its proper management policies. The country’s GDP growth rate in the first 10 months of 2014 has attained 5.62% while inflation has been effectively curbed. Production and export have both increased, foreign exchange rate remained stable while the country’s foreign reserve has reached the record high level of US$35 billion, FDI registered at US$12 billion. The real estate market is also regaining pace. Foreign investors increasingly eye the country’s abundant natural resources and human force as great potentials for growth. Persistent with administrative reforms, the business environment in Vietnam has greatly improved to become ever more attractive to world investors. The US Chamber of Commerce in Singapore has recently ranked Vietnam the second most attractive destination for American investors. The country’s non-guarantee government bonds have climbed up one level from B2 to B1 on Moody’s ratings owing to prospects of stable growth. Fitch Ratings agency also plans to raise Vietnam from B+ to BB- as sign of economic recovery and risks mitigation. The country’s achievements after years of renovation has created a new vision and reputation among world investors as yet another Asian economy with ample potentials for growth. Being WTO member since 2007, Vietnam is signing with EU free trade agreement as well as negotiating with major partners like United State, Japan in order to sign the Trans-Pacific-Partnership agreement in the near future. From the perspectives of Middle East investors, Vietnam is also gaining popularity as the two-way political, economic and trade relationship expands. Special interests have been paid to the country’s real estate and oil & gas markets by renowned ME corporations over the past decade. Investment projects worth billions of US dollars were sketched up by Dubai-based Nakheel, Dubai ICD and Qatar-based United Development Company PSC to develop housing, real estate and road infrastructure in provinces of Vietnam. The US$3.5 billion worth investment project by Kuwait’s International Oil Corporation to build Nghi Son petrochemical refinery complex has been on steady progress. The common perception of Vietnam in the eyes of entrepreneurs from the Gulf has been a favorable business environment and promising ample profits. As the Vietnamese economy is expected to grow steadily and further improve its business environment, the country is having a lot to offer Middle East investors. Slow site clearance hits WB-funded project The World Bank-funded Mekong Delta Transport Infrastructure Development Project, also known as WB5, was originally planned to be complete in the third quarter last year but now remains unfinished due to the lack of capital for site clearance. Nguyen Van The, Deputy Minister of Transport, told a meeting with the World Bank (WB) over the progress of WB5 project on November 10 that the ministry is borrowing funds from the provinces through the project passes to clear land for the project. He promised the site clearance process would be finished no later than February next year so that the project could be completed late next year. The ministry has asked the project management unit and relevant agencies to cooperate with provincial authorities to boost site clearance work and speed up work on the project. WB5 was approved in 2007 to improve traffic systems in the Mekong Delta region, reduce traffic congestion on the main roads and waterways, cut costs for transportation from production areas to consumption markets, and support socio-economic development in the region. The project comprises of four packages. Package A is to upgrade National Highways 53, 54 and 91, which is executed by the Directorate for Roads of Vietnam. Package B is executed by Vietnam Inland Waterways Administration (VIWA) to expand waterway corridors in the north of the region which run through Dong Thap Muoi and the Long Xuyen area, and coastal corridors in the south. Package C is implemented by local authorities to upgrade provincial roads and local waterways. Package D is done by VIWA to support the Transport Ministry and local authorities in terms of technology. The project is being carried out in 14 cities and provinces, including Ben Tre, Soc Trang, Ca Mau, Vinh Long, An Giang, Long An, Tien Giang, Dong Thap, Hau Giang, Kien Giang, Bac Lieu, Can Tho and HCMC. With construction work kicked off in 2008, WB5 costs US$312 million, including loans from the WB, a US$25 million grant from the Australian government, and US$79.36 million from Vietnam’s Government. The cost of site clearance compensation and resettlement of affected households is more than US$62 million. Looking into the progress of the project in the period from October 27 to November 1, the WB suggested the ministry focus on site clearance, labor safety, and efficient use of equipment. South Koreans visit Danang in droves The number of South Korean tourists traveling to Danang City has doubled to between 2,000 and 2,200 a week now, compared to the same period last year, said a local tourism official. Tran Chi Cuong, deputy director of Danang’s Department of Culture, Sports and Tourism, said South Korean arrivals in Danang posted the fastest growth in 2014. Five domestic and foreign airlines have been operating 20 scheduled and chartered flights between Danang and some cities in South Korea a week. “South Korea is the visitor-generating market with the most impressive growth within a year. The good news is most visitors on flights to Danang are tourists,” said Cuong. Few years ago, there used to be sudden growth in the number of Chinese tourists with dozens of chartered flights to Danang a week. However, this market has not recovered after many flights were canceled due to the East Sea tension. Strong growth in footwear exports to U.S. Vietnam’s footwear exports to the U.S are growing fast and projected to hold bigger share in this market while such products of China shipped to America are declining. Matt Priest, chairman of the Footwear Distributors and Retailers of America (FDRA), told a conference on how to enhance business efficiency of footwear factories held in HCMC on November 10 by the Vietnam Leather and Footwear Association (Lefaso) that Vietnam’s footwear exports to the U.S. had edged up nearly 16.5% this year. Meanwhile, America’s footwear imports inched up 1.6% only while China’s footwear shipments to the U.S. slid 4.4%. In addition to Vietnam, footwear exports of India, Cambodia and Ethiopia to the U.S. enjoyed good growth as well. Priest said market share of Vietnam’s footwear in the U.S. is forecast to climb to 12% in 2018 from the 10% recorded last year. However, this estimate does not take into account the Trans-Pacific Partnership (TPP) agreement which has 12 participating nations including the U.S. and Vietnam. Vietnam’s footwear exports to America have grown 20-21% a year on average. Last year saw the U.S. importing more than 2.3 billion shoes and collecting US$2.5 billion in tax on footwear imports. China’s footwear products accounted for 80%, followed by Vietnam with 10%, Indonesia with 4%, Italy with 0.8% and India with 0.7%. Oliver Ng, sales director of Taiwan-based Ever Rite International, said the company completed technology transfer from China to Vietnam in September last year. More firms are inclined to shift their production to Vietnam because of China’s rising labor costs and aging workforce. Scott Thomas from U.S. firm Wolverine Worldwide said China and Vietnam supplied 81.7% and 10% of footwear products to the company in 2007, but the figures later went down to 75% for China and moved up to 14.5% for Vietnam, and are estimated at 33% and 35% in 2020 respectively. Lefaso vice chairman Diep Thanh Kiet, said Vietnam shipped abroad footwear and handbag products worth a combined US$10 billion in January-October. Therefore, the target of US$12 billion for all of this year is obtainable. Powdered milk for under-6 children must have prices declared Starting from December 1, sellers of powdered milk products for children under six will not have to re-register prices but have to declare them whenever making price adjustments, said the Ministry of Finance in its latest announcement. Dairy enterprises and retailers will make their price declarations in accordance with the process and forms regulated in the ministry’s Circular 56/2014/TT-BTC, issued on April 28 this year. The circular guides the implementation of Decree 177/2013/ND-CP, issued on November 14 last year, to give detailed regulations on the implemenation of the Price Law. According to the ministry, after retailers and enterprises have declared prices, provincial departments of finance will have to check and review their declarations. The retail and wholesale prices that are declared must not exceed the maximum prices that retailers and enterprises have registered at finance departments and offices in their localities. The ministry also demands dairy enterprises to cut costs for advertising and marketing to reduce the local milk prices and make the price reduction timely upon the fall of input costs, including material milk cost and import prices. On May 20, 2014, the ministry issued Decision 1079/QD-BTC and Document 6544/BTC-QLC to regulate and guide the implementation of the price stabilization program for dairy products for children under six. Since the price cap on milk products was applied, prices of more than 500 dairy products have been registered and prices of most products have decreased by more than 10% compared to the period before that. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR