BUSINESS IN BRIEF 23/11

Phu Quoc seaport gets green light

The Government on Wednesday announced that the Prime Minister has approved the construction of a seaport of internationally accepted standards in Phu Quoc Island in Kien Giang province.

The Prime Minister asked the officials of the southern province of Kien Giang People's Committee and the ministries of transportation, finance and planning and investment to reach an agreement on the investment, selection of investors and the state budget contribution for the project.

He also asked the concerned ministries to instruct the Kien Giang officials to develop policies and incentives to attract investors to the project.

The seaport will be constructed in Duong Dong town in Phu Quoc Island. Its pier will be 400m long and 19m wide. A 1,020-metre-long bridge will be built to connect the pier with the shore. The seaport is expected to have the capacity of handling 5,000 to 6,000 passengers and container vessels as well.

The project investment is estimated to be VND1,254 billion (or US$58 million). The first of the two phases of construction will be worth VND1,089 billion ($51 million).

The Kien Giang Province will call for investors to develop the seaport under a public-private partnership model. Vingroup has shown interest in the project.

The number of tourists arriving by sea at Phu Quoc Island is expected to rise annually by 105,000 to 190,000 by 2020, and by 350,000 to 550,000 by 2030.

Binh Duong to hit $4b surplus

This southern province is likely to record a trade surplus of more than US$4 billion by year-end, according to the provincial people's committee.

Figures from the provincial statistics office showed that provincial export revenues were expected to reach more than $18 billion, a 17.5-per cent year-on-year increase, with the foreign-invested sector contributing 82 per cent of total export value. Among the province's major exports, footwear, textiles and garments and wood products are expected to reach an export turnover exceeding $1 billion.

Meanwhile, provincial import expenses were estimated at about $4 billion, an 18-per cent year-on-year increase, with raw materials for production as well as machinery and equipment adding to the increase. The foreign-invested sector made up the largest share of imports at 78 per cent.

Vo Van Cu, director of the provincial industry and trade department, said export markets such as ASEAN countries, the United States and European Union were stable and would continue to grow.

Most provincial exporters had inked contracts with foreign partners for the entire year, with some even winning export deals until May next year, Cu revealed, predicting that the provincial trade surplus might surpass expectations.

Provincial figures showed that Binh Duong achieved a trade surplus of more than $2.3 billion in the past 10 months. Exports earned more than $12.7 billion, a 15.2-per cent year-on-year increase, with foreign investors providing more than $10.5 billion, a 16.2-per cent year-on-year increase.

Footwear, garments, and timber were the key export earners, bringing in more than $1 billion to the province, while computers, electronics and textiles likewise recorded rapid growth.

VN told to boost competitiveness

Viet Nam is becoming an attractive investment destination for German companies, but the country needs to enhance its competitiveness and improve its policies.

This was said at a dialogue, entitled "Industrial development in Viet Nam, supply of skilled labour and other challenges," held by the ministry of planning and investment to seek further economic co-operation with Germany.

German Vice Chancellor and Federal Minister for Economic Affairs and Energy Sigmar Gabriel said that Viet Nam was regarded as an important partner of Germany in ASEAN and that many German businesses were seeking to invest in the country.

German businesses were showing interest in trade and training sectors of Viet Nam.

Sigmar added that Viet Nam needed to enhance its competitiveness, coupled with better policies to attract a greater number of German investors.

Minister of Planning and Investment Bui Quang Vinh said that there were untapped opportunities for Viet Nam in Germany, the largest economy in the European Union.

He stressed the importance of comprehensive co-operation between the two countries, especially in investment, trade and entrepreneurial training.

Vinh said that Viet Nam would work to increase economic co-operation in areas of strength between the two countries.

Statistics of the Foreign Investment Agency show that there has been an increasing inflow of German investments into Viet Nam since 2011.

In the first ten months of 2011, German businesses poured US$34 million into seven projects in Viet Nam, but the figures increased to $90 million and 18 projects respectively in the same period in 2013.

German investors poured $142 million into 21 projects in the first 10 months of this year. As of the end of October this year, there were 239 German projects in Viet Nam with a total registered capital of $1.336 billion. Germany ranks 22nd among the countries and territories with investments in Viet Nam.

Do Nhat Hoang, Director of the Foreign Investment Agency, hoped that foreign investments into Viet Nam, especially from Germany, will increase, given the country's stable political situation, abundant labour force and favourable policies, besides advantageous geographical location.

German investors also suggested that Viet Nam should improve the business and investment climate, and improve the legal system in line with the requirements of the World Trade Organisation.

At the dialogue, the two ministries signed a joint co-operation statement on entrepreneurial training in the 2014-16 period.

German deal to help VN companies go global

TUV SUD, a German provider of independent testing, inspection, auditing, certification, and training services, yesterday signed a memorandum of understanding with the HCM City Union of Business Associations to enlarge the scope of an earlier one signed in March.

The March MoU saw the setting up of training courses in international quality, safety standards, and product and management system certification for HUBA's members in the textile and garment industries.

Following positive feedback, the two sides decided to expand the co-operation to include other industries like electronics, medical devices, and food, Sathish Kumar Somuraj, general director of TUV SUD Viet Nam, said.

Pham Ngoc Hung, permanent deputy chairman of HUBA, said the Trans Pacific Partnership and other free trade agreements that Viet Nam is negotiating would bring about global access for Vietnamese businesses.

But to capitalise on this, local manufacturers would need to comply with stringent quality and safety regulations in importing countries, he said.

Drik Eilers, board member of TUV SUD AG, said a growing middle class demanding higher standards of living and with growing concern for the environment led to an increase in technical safety, quality, and environmental regulations and standards adopted by countries.

FPT revenue reaches $1.6b in first 10 months

FPT Group, a Viet Nam software giant, has earned VND27.29 trillion (US$1.28 billion) in the first 10 months of the year, an increase of 22 per cent on the year and 109 per cent more than its annual target, according to an FPT spokesperson.

The increase was attributed to growing software exports, telecommunications and retail. Pre-tax profits reached VND2.059 trillion (US$96.7 million), a 0.4 per cent increase on the year. After-tax profits of VND1.745 trillion posted a 3 per cent increase on the year.

Sacombank wins e-bank popularity contest

Vnexpress, an online newspaper, named Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) Viet Nam's favourite e-bank on Wednesday at the MyEbank 2014 awards ceremony in Ha Noi.

Vnexpress readers voted for the winner between October 6 and November 2, in a contest sponsored by the State Bank of Vietnam and Smartlink Card Joint Stock Company. It attracted more than two million readers' participation, or about 20 per cent of online bank users in Viet Nam.

The organising board awarded five banks the rank of favourite mobile banking service: TienPhong Commercial Joint Stock Bank (TPBank), Sacombank and Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Maritime Bank and Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank).

USG Boral increases manufacturing capacity

USG Boral Vietnam has more than tripled the capacity of its technical boards this year with the addition of a new manufacturing line to its plant in Hiep Phuoc Industrial Park in HCM City.

Gregory Lukasik, USG Boral Vietnam general manager, made the announcement during the company's official launching in Viet Nam on Wednesday.

Lukasik explained that the company was celebrating its launching now because the year 2014 marked the formation of the joint venture that created it.

"Technical boards offer great potential for growth in Viet Nam. They respond to a broad range of needs by end users and meet local construction regulations such as fire, moisture resistance and so on. As the Vietnamese market matures, so will demand for more technical boards," Lukasik said.

USG Corporation of the United States and Boral Limited of Australia formed a 50-50 joint venture known as USG Boral in early 2014.

FIA sets up support section for Japan businesses

A support section under the Foreign Investment Agency (FIA) made its debut on November 21 to support Japanese businesses to learn about investment opportunities in Vietnam, said Deputy Minister of Planning and Investment Nguyen Van Trung.

Toma Masaaki, Second Secretary at the Japanese Embassy in Vietnam said in recent times Japanese businesses have heavily invested in Vietnam in such fields as manufacturing, processing, agriculture and technology. He expressed his wish that the establishment of the new section would further promote its role in supporting Japanese businesses in Vietnam.

Do Nhat Hoang, FIA Director also introduced about the section, which he said would update Japanese businesses with useful information, answer queries and provide legal consultancy and investment formalities.

At present, Japan ranks fourth with total newly-registered capital and increased capital of US$1.66 billion, making up 12.1% of the total foreign investment capital in Vietnam.

According to the Ministry of Planning and Investment (MPI), Japanese investment in the country is likely to increase rapidly in the coming time, with a focus on pharmaceuticals, chemicals, steel production, machinery and electronics and transport.  

Vietnam trade gap shrinks US$2 billion

In the 10 months leading up to November, the value of Vietnam’s imports jumped 11.7% on-year to US$127.83 billion, while exports increased 13.8% on-year to US$130.02 billion.

The difference between imports and exports (the trade gap) has shrunk by US$2.19 billion for the 10 month period on the back of record high exports.

In the first half of November, some products declined in export value including telephones and telephone accessories, garments and textiles, machinery, tools and seafood. Imports of machinery, tools, spare parts and mobile phones also were lower for the two-week period.

Danang consumers increasingly favour domestic products

The five-year Buy Vietnamese Goods campaign has increased the rate of Vietnamese goods consumed by local people in the central city of Danang to over 80% this year from 50% in 2009, the Vietnam Economic News reported.

According to Vice President of Danang’s Vietnam Fatherland Front Committee, Tran Van Du, over the past five years of this campaign, Danang has organised more than 22 industry and trade fairs to promote domestically produced goods.

Since 2011, Danang has held annual fairs hosting 350-400 booths for Vietnamese goods, offering a good opportunity for domestic producers to introduce their products and intensify corporate links. Local producers have been funded for technological innovation and brand protection.

Danang also spent VND500 million organising sales trips to mountainous, rural, and industrial areas and funded 40 small cooperatives and production bases in the city to build their own websites.

“Nearly 90% of city dwellers are interested in the campaign. To benefit the spread of the campaign, domestic producers have realised their roles and responsibilities to improve product quality, reduce costs, and establish branding,” Du was quoted as saying.

In the time to come, state agencies and business associations will further boost the campaign targeting consumers, manufacturers, and students.

Periodical evaluation of the campaign’s implementation will also take place, along with related incentives and mechanisms to boost the consumption of Vietnamese goods, said Vice Chairman of Danang’s People’s Committee and Deputy Permanent Director of the Buy Vietnamese Goods Campaign Steering Committee Phung Tan Viet.

According to Deputy Director of Danang’s Department of Industry and Trade, Lu Bang, the department will strengthen cooperation with relevant departments and agencies to further promote the campaign through activities such as tracking market movements, ensuring smooth commodity circulation, effective sales promotion implementation, organising Vietnamese goods exhibitions and fairs, as well as supply-demand conferences, implementing wholesale network plans, researching and proposing solutions to support producers, and enhancing market control.

HCM City leaders dialogue with foreign enterprises

The Investment and Trade Promotion Centre in Ho Chi Minh City (ITPC) on November 20 hosted a dialogue among city officials, representatives of foreign invested enterprises and other interested parties aimed at improving the business environment.

A number of foreign-invested enterprises reported the period for obtaining investment licenses has been shortened. However, a few complained cumbersome formalities have resulted in unnecessary costs and urged the city to continue to streamline policies.

Nicola Connolly, the European Chamber of Commerce in Vietnam (Eurocham) chairwoman, said a common obstacle faced by EuroCham members is the lack of transparency.

She applauded the local authorities’ efforts to attract new FDI enterprises and support the investment process as well as improving formalities to facilitate companies’ operations.

In the first ten months of the year, HCM City has taken the lead in the country in attracting foreign investment with registered foreign capital investment of US$2.9 billion in 340 projects, which includes a US$1.4 billion Samsung group project.

Cassava price spike impacts ethanol plants

Increasingly high cassava prices have spelled trouble for local ethanol factories, according to an annual report from the Vietnam Bio-fuel Association.

Export of dried sliced cassava to China has remained high, keeping local prices at high levels. The association said dried sliced cassava cost US$120 a ton in 2007 but the price doubled to US$250 at the end of 2013.

China’s demand for cassava is huge while Vietnam’s output is limited. China alcohol plants have completed their depreciation. Those factors have led cassava prices to surge, making it hard for Vietnamese ethanol businesses to afford, according to the report.

Vietnam now has a number of ethanol plants with capacity ranging from 45 to 120 million liters a year such as Dong Xanh, Tung Lam, Binh Phuoc, Dung Quat, Phu Tho, Dak To and Dak Nong. Most of them use dried and fresh cassava as feedstock.

Vietnam’s total cassava acreage is around 450,000 hectares with average output of 20 tons per hectare, supplying around 9.5 million tons of fresh cassava a year. Of this, four million tons goes to flour processing plants and the remainder is sliced and dried with a total volume of 2.5 million tons per annum.

The association said factors including high material cost, investment and depreciation are posing challenges to Vietnamese producers, mostly newly established ones, and making it difficult for exporters to compete with U.S. and Brazilian firms. Meanwhile, demand for cassava on the local market is low, making domestic businesses grapple with difficulties.

As planned by the Government, petrol with 5% bio-ethanol content, or E5 petrol, will be made available in seven provinces and cities including Hanoi, Haiphong, HCMC, Can Tho, Danang, Ba Ria-Vung Tau and Quang Ngai from December 1, 2014 and E5 and E10 petrol will be launched nationwide at the end  of 2017.

Year-end sales launched for many housing projects

The property market in HCMC has turned busy in the final quarter with many projects launched and offered for sale.

The most noteworthy project is Vingroup’s Vinhomes Central Park project in Tan Cang area in Binh Thanh District. The VND30-trillion project, whose work kicked off last July, is scheduled for completion in 2017 to supply around 10,000 apartment units for the market.

Meanwhile, Novaland has launched thousands of apartments in different projects like Tropic Garden and Lexington Residence in District 2, The Prince Residence in Phu Nhuan District and River Gate in District 4.

Besides, around 3,000 apartments of the Masteri Thao Dien project invested by Thao Dien Investment Company in District 2 were offered for sale late last month.

Other property investors like Him Lam, Phu My Hung, Dat Xanh and Phat Dat have also launched the sale of thousands of apartments.

According to statistics of Cushman & Wakefield, the HCMC market will have an additional 52,600 apartments at 61 new projects, with 29% to be put up for sale from now towards the end of next year.

Despite smaller volumes, townhouse and attached house projects still have competitive prices like Le Thanh Company’s Le Thanh An Lac project in Binh Tan District and 235 adjoining houses of Khang Dien Company’s Mega Ruby project in District 9.

Earlier, many experts expressed concern that the property market might face an oversupply as seen in 2007 and 2008.

Speaking to the Daily, Nguyen Ngoc Thanh, vice chairman of the Vietnam Real Estate Association, said the volume of housing is offered for sale in different phases lasting years, so it is unlikely supply will exceed demand.

Thanh added many property investors have left the market due to losses and that those who have been able to survive tough times are financially capable to press on with their projects.

According to Thanh, housing products at this time of year have been adjusted in terms of size and price to fit demand of customers.

Ho Thi Minh Thao, deputy director of Khang Dien, said any housing segment has its own edge on the market if investors adjust selling prices and payment modes to well suit customers’ needs. It is obvious that only products with quality guaranteed, amenities accompanied, infrastructure finished and transport convenient are still attractive to buyers, Thao added.

According to Cushman & Wakefield, apartments of 40-70 square meters and priced at VND15-18 million per square meter will continue to lure customers.

Twelve e-commerce websites fined for violations

Hanoi market monitoring authorities imposed total fines of VND240 million on 12 e-commerce website operators in the capital for failure to register with the Vietnam E-Commerce and Information Technology Agency (VECITA).

VECITA backed the Hanoi market monitoring authorities to inspect enterprises and individuals operating e-commerce sites in the city, said a source from the agency under the Ministry of Industry and Trade.

Early this month, six enterprises and individuals that own duochungthanh.vn, xedapdien388.com, onggiaika.com, giaynangchieucao.com, vietktv.vn, and hoanggiamobi.com websites had been fined a total of VND129 million.

In late October, six other firms and individuals owning Bep.vn, Thegioibep.com, VertuCenter.com, Luxurymall.vn, Donghothuysy.com and Thegioivertu.com had been fined a combined VND110 million.

Those website operators had been fined because they did not announce the operations of their e-commerce sites to the VECITA in accordance with Article 27 of Government Decree 52/2013/ND-CP, which regulates that enterprises, organizations and individuals that own e-commerce sites have to inform VECITA of their website operations.

A majority of e-commerce websites are approved by the agency when they are registered.

However, several cases cannot get such approval from the authorities.

Bitcoin Vietnam Co. Ltd is a case in point. In March, Bitcoin Vietnam wrote to VECITA registering its website at www.bitcoinvietnam.com.vn, which allows subscribers to trade Bitcoin. The agency turned down the www.bitcoinvietnam.com.vn registration, saying such an e-commerce site must provide specific information about products or services it puts on sale.

The digital currency Bitcoin is not yet defined as a product or a service by any prevailing legal documents of Vietnam, so VECITA declined the registration of a currency trading site, it explained.

Local market needs to be protected from cheap goods

Local firms should take proactive measures to protect their interests on the home market due to large volumes of cheap imports flowing into the country.

Nguyen Huu Truong Hung, a representative of a board responsible for trade protectionism investigations under the Vietnam Competition Authority (VCA), raised this issue at a seminar last week on how to make the most of trade protectionist measures.

Hung said 80 anti-dumping lawsuits had been brought against Vietnamese firms over the past 10 years, but the country succeeded in just one case by imposing anti-dumping duty on cold-rolled stainless steel imports from Taiwan, China, Malaysia and Indonesia in September this year.

Local businesses have initiated three cases with two involving goods dumping on the local market. In fact, the VCA has investigated 11 cases, which shows enterprises are aware of self-protection but they often give up due to a time-consuming and complicated process.

MPI wants higher public debt threshold

The Academy of Policy and Development under the Ministry of Planning and Investment (MPI) has proposed raising the public debt ceiling to 68% of gross domestic product (GDP) from the current 65%.

In a project determining a safe public debt level for the country from 2014 to 2020, writers from the academy said this is an optimal level for the period.

Data collected between 1995 and 2013 showed that with the public debt/GDP ratio of 68% or lower, public debt brought positive impacts to economic growth and sustainability of fiscal policy.

However, when the ratio exceeded 68%, public debt would dampen investment and economic growth. It would also hit the nation’s solvency and public debt safety.

Speaking at a seminar in Hanoi on November 13, Deputy Minister of Planning and Investment Bui Quang Thu said that the project aims to build scientific foundations and collect international experiences on public debt, thus suggesting a safe public debt level for Vietnam in the coming time.

The project indicated that Vietnam now sees low risk of insolvency. However, as risks remain, its outlook is unsustainable.

Explaining the low risk of insolvency, the report said that domestic debt (at 50.99% of total public debt) has a higher ratio than foreign debt.

Domestic debt is on the rise. Despite short tenors, solvency for domestic debt is secured.

Secondly, foreign debt has a lower ratio than domestic debt. It is declining with risks much lower than safety standards of the International Monetary Fund (IMF) and the World Bank (WB).

Thirdly, as per calculations under the Law on Public Debt Management, the public debt/GDP ratio was 54.2% in 2013 and is estimated at 59.9% in 2014. Researchers of the project calculated the figures at 61.28% and 65.2% respectively, which are still at safe levels.

Lastly, credit ratings firms such as Fitch Ratings, Moody’s and S&P have rated Vietnam’s foreign and local currency issuer default ratings at BB- and B1 with a stable outlook, meaning that Vietnam has yet to fall into a public debt crisis.

Meanwhile, Le Xuan Nghia, a prominent economist, said at on November 13’s seminar that bad debts at banks also cause huge impact on public debt.

If a bank goes bust, the Government, through the central bank, will have to pay deposits back to customers. The Government will also intervene if State-owned enterprises, especially large firms, announce bankruptcy.

Public debt is closely associated with bad debts. If bad debts are solved thoroughly and the nation obtains GDP growth rate from 7%, public debt will be not a big issue, Nghia said.

Otherwise, public debt will become a complicated issue in the next few years if GDP growth hovers in the 5-6% range, he said.

ASU supports Vietnam in technology training

Arizona State University (ASU), the leading public research institute stateside and among the top 100 universities in the world, has signed a memorandum of understanding (MOU) with Vietnam’s Posts and Telecommunications Institute of Technology (PTIT), to support the latter in technology training, having earlier joining forces with other Vietnamese partners in an engineering program on October 24.

The five-year MOU focuses on establishing cooperative relations in advancing education quality and methods in Vietnam through such activities as hosting an international conference in Hanoi, a short training course on cyber security at ASU, the establishment of a joint Masters of Science program at PTIT, and the development of a new learning management system for PTIT. ASU will help PTIT develop and improve the quality of students in the information assurance field.

“This MOU will help PTIT advance modern instructional approaches and curricula to improve the learning outcome of PTIT’s exclusive information and network security students,” PTIT President Hoang Minh said in a statement.

Meanwhile, Professor Michael Crow, President of ASU, stressed, “These efforts are a testament to Arizona State University being the ‘New American University’ which works collaboratively across borders and cultures, and across fields of expertise, to form partnerships that use local knowledge to make a global impact, and global knowledge to make an impact locally.”

The local partner observed in the statement that enterprises in the fields of posts, telecommunications and IT are very concerned about the quality of their labor force due to lack of practical skills. Many enterprises of these fields such as Viettel, VNPT have had to organize several training courses for their new employees to improve their working performance. Therefore, the partnership is expected to help overcome the reality that graduated students are not able to meet enterprises’ requests, and to avoid the situation where enterprises have to re-train their laborers.

Apart from the partnership with PTIT, ASU has been working with Vietnam’s Ministry of Education and Training and other partners including USAID, Intel on another long-term program namely Higher Engineering Education Alliance Program (HEEAP).

The program began in 2010 with the involvement of five top technical universities in Vietnam and in 2011 expanded to include three vocational colleges. HEEAP is extended to 2017 with the goals of faculty development, leadership development and supporting female students’ interests in technical fields.

At a review meeting in HCMC on October 24, ASUS President Michael Crow said, “This project will aid the development of education systems in the participating universities and colleges, and will spur innovation in education systems throughout Vietnam.”

To date, around 250 lecturers from HEEAP universities have been trained in the U.S. and are working on projects to transform engineering education from a passive, purely theory-based instruction to active, applied and theory-based learning.

In addition, many conferences, seminars and workshops have been convened to enhance leadership capabilities in the participating universities. Also, a program for female students’ interests in technical fields has provided over 200 female vocational college students with scholarships from the program.

Dong Thap urged to have specific growth plan

Experts at a meeting in Can Tho City Wednesday advised Dong Thap Province government to have a specific plan for its socio-economic development in 2016-2020, instead of simply setting targets.

The Mekong Delta Province targets annual economic growth of 7% during the period and average income per capita of US$2,360 by 2020, said Khuc Quang Dung, director of Dong Thap Department of Planning and Investment.

The province has set the growth rate for each economic sector, he told the meeting aimed to seek opinions for the province’s draft socio-economic development plan in the five-year period.

In particular, the annual growth rate of agro-aqua-forestry is targeted at 4.3%, trade and service as a whole at 7.1%, and manufacturing and construction at 11% and 10.8% respectively.

“Agriculture will be developed extensively to make commercial products for export while manufacturing and construction will focus on using environmentally friendly equipment and applying advanced technologies to create more competitive products,” Dung said.

For trade-service, Dong Thap will focus on supermarket and distribution chains, and boost exports of products that are of high added value.

At the same time, the province will cooperate with other localities in the delta to develop its tourism industry.

However, experts at the meeting said that the draft is vague and Dong Thap should be more specific on setting development goals and how to achieve them.

Nguyen Van Sanh, head of the Mekong Delta Development Research Institute, said the province targets to restructure its agriculture but has not made clear how it will restructure the sector.

For tourism development, the province should connect with neighboring countries such as Laos and Cambodia to make its tourism products more attractive and diverse, instead of linking with localities in the region only, he suggested.

Le Van Hoa, head of the Department of Agriculture and Applied Biology of Can Tho University, suggested Dong Thap have plans to develop its typical products and build a production-consumption chain for domestic sale and export.

Environment expert Duong Van Ni advised the provincial government to focus on growing certain farm products suitable to its flooded areas such as lotus and water-lily all year round to attract more visitors and earn more income.

Vo Hung Dung, chairman of the Vietnam Chamber of Commerce and Industry (VCCI) in Can Tho City, said Dong Thap should not pay too much attention to economic growth.

“What matters is how to develop, develop in what direction, and which sectors should be developed,” Dung said.

He stressed that Dong Thap had a developed agriculture sector but had not developed a distribution market and left it all to enterprises and therefore, cannot get high profit.

Dong Thap is focusing heavily on production and has forgotten how to boost consumption of its products, and as such farmers earn the lowest profits while processors earn higher and sellers earn the highest, he said.

City allows partial payment of tax arrears

The HCMC Department of Tax has permitted enterprises to partially pay their tax arrears before it takes coercive measures, including putting their names in the media.

Le Thi Thu Huong, deputy head of the city’s tax department, told the Daily that this shows the city’s flexible approach towards those having tax arrears as the department is aware that the business conditions remain tough.

Data from the department showed it had settled tax arrears totaling over VND14.5 trillion in the year to last month, she said. Many taxpayers have been found to deliberately delay tax payments.

By the end of last month, the department publicized 16 enterprises with the amount of unpaid tax reaching over VND1 billion each. “This is a small figure compared to reality. We will continue making known the names of more enterprises with big tax arrears,” Huong noted.

Viettel, VinaPhone announce iPhone 6 prices

Viettel and VinaPhone, two out of three major distributors of iPhone in Vietnam, unveiled the prices of iPhone 6 that have been available at stores of Viettel and Vinaphone nationwide from November 14.

Viettel sells iPhone 6 16GB, 64GB and 128GB at VND16,499,000, VND19,099,000 and VND21,699,000 respectively. Meanwhile, the price of iPhone 6 Plus ranges from VND19,099,000 to VND24,299,000. These rates exclude an unlocking fee of VND700,000.

VinaPhone also announced the prices of iPhone 6 and iPhone 6 Plus. Its prepaid mobile phone subscribers will pay VND16,799,000 for iPhone 6 16GB, VND19,399,000 for 64GB and VND21,999,000 for 128GB.

Meanwhile, VinaPhone will offer three plans for postpaid subscribers with the lowest price at VND16,099,000 for iPhone 6 16GB.

Regarding iPhone 6 Plus using prepaid plans, VinaPhone offers VND19,399,000, VND21,999,000 and VND24,599,000 for 16GB, 64GB and 128GB respectively. The prices for postpaid plans are VND18,699,000 for 16GB, VND21,099,000 for 64GB and VND23,499,000 for 128GB.

Until now, only FPT, the remaining distributor, has yet released the prices of this gadget.

Vietnam seen further liberalizing economy

Vietnam will intensify efforts to liberalize its economy for foreign investors in preparation for the ASEAN Economic Community in late 2015, and in capitalizing on more free trade opportunities with the EU and other economies, according to a just-released report.

The report “Vietnam liberalization pace may lag EU trade deal”, issued by EU-based Oxford Analytica, suggests that, however, this will be a gradual process, and significant obstacles will remain for the time being in the regulatory, business and investment frameworks.

The report, which was prepared after Prime Minister Nguyen Tan Dung’s visit to the EU earlier this month, said prospects for FDI into Vietnam were promising.

Policymakers have the task of nurturing local firms in order that they can grow and meet foreign investors’ needs, thereby establishing the necessary linkages that allow local firms to move up the value chain. However, Vietnam’s trade data unveil a two-track corporate sector that should draw greater attention.

In 2013, Vietnam recorded exports of US$132.2 billion and imports of US$131.1 billion.

However, the domestic corporate sector generated exports of US$43.8 billion but spent US$56.8 billion on imports, meaning they had a net trade deficit of US$13 billion. Meanwhile, the foreign investment sector earned US$88.4 billion from exports compared to their import bill of US$74.5 billion, resulting in a net trade surplus of US$14.1 billion.

Such data show local enterprises as underperformers, despite the fact that foreign firms are typically kept out of the key commodities export sector for which Vietnam is perhaps most known, such as rice, coffee, pepper and seafood.

Foreign firms stand to capitalize on this advantage over domestic firms as Vietnam’s economy opens its doors further, according to the report.

The AEC is scheduled to come into effect at the end of next year. If the AEC is successful it could create a highly conductive environment for increased intra-Southeast Asia trade and investment flows.

Given its geographical location, Vietnam could become a hub for cross-border production and transportation networks, says the report.

Meanwhile, the EU-Vietnam FTA would allow more European FDI to flow into Vietnam, which would be attractive to investors both as a market to access, and a platform from which to produce items for sale in ASEAN or the large EU market.

Should the Trans-Pacific Partnership agreement be finalized with Vietnam as a member, a new wave of FDI would be possible, most likely from Chinese firms and other foreign firms previously located in China that want to manufacture and export within the TPP umbrella.

A second wave of business liberalization reform is possible, as policymakers begin drafting the pivotal Enterprise and Investment laws, from which domestic and foreign-owned firms could benefit.

The past reform wave has typically been driven by a downturn in investment activity and external commitment that necessitated change.

At present, FDI looks reasonably strong although in the World Bank’s 2015 Doing Business report, Vietnam has dropped in global ranking from 172 to 178. This will trigger policymakers’ concern and action, in case FDI shifts elsewhere.

However, Oxford Analytica’s report showed some constraints that foreign investors might face in short to medium term. These constraints include slow reforms of State-owned enterprises.

Moreover, according to the report, policymakers have been slow to embrace public-private partnership and build own transfer models as a means of galvanizing FDI for public investment projects.

The regulatory framework remains largely opaque and complex. There has been a tendency for insufficient dialogue and consultation with the corporate community when drafting business legislation, says the report.

Insufficient linkage is also a constraint. Linkage between domestic firms and foreign investors – with domestic firms serving as suppliers of inputs to foreign firms – remain scant.

Tra fish exporters want ice-ratio rule delayed

Regulations on ice and moisture content in tra fish (Pangasius) fillets for export will take effect next month, but seafood firms want them to be delayed.

According to Government Decree 36/2014/ND-CP on farming, processing and exporting tra fish, widely known as “Tra fish Decree,” exporters of tra fish will be forced to cap ice and moisture at 10% and 83% of the total weight of a product respectively.

However, such regulations sparked outcries at a meeting in Can Tho City Tuesday between tra exporters and the Vietnam Pangasius Association (VN Pangasius).

Nguyen Van Ky, general director of An Giang Fisheries Import and Export JSC, said his firm would have no other choice but to double prices to ensure a certain profit margin when conforming to the new higher standards. However, foreign importers might walk away due to high prices. “I suggest delaying the enforcement of the decree.”

Ngo Quang Truong, director of Bien Dong Seafood Co. Ltd., said though product quality could be improved thanks to the new requirements for ice and moisture ratios, import markets might not accept higher prices, thus leading to layoffs and plant interruptions.

Truong said there should be a roadmap for enforcing the new rules and that it should depend on requirements of each particular market.

Nonetheless, Ho Van Vang, vice chairman of VN Pangasius, said, “If you continue to do business this way, the tra fish sector would go bankrupt. I think enterprises should have a second thought.”

Vo Hung Dung, vice chairman and general secretary of VN Pangasius, said since some provisions in Decree 36 are hard to implement at the moment, the decree could only be fully brought into play by 2016.

Data from the General Department of Customs showed the country shipped abroad US$1.35 billion worth of tra fish in the year to the middle of last month, up 0.2% over the same period last year. The figure is estimated to reach about US$1.75 billion in all of this year, equivalent to last year.

Ministry to pilot e-invoices on 200 enterprises

The Ministry of Finance has announced a pilot scheme to allow 200 firms in Hanoi and HCMC to use electronic invoices late this year. The electronic bill will be provided with authentication code and number by the taxman.

The authentication code and number are character strings which are encoded and provided by an authentication system based on billing information of goods or services.

Besides, a QR code will be added in the upper right corner of the invoice. Users can scan this two-dimensional barcode to read and check the information by electronic devices installed with QR code reader software such as a smartphone.

The finance ministry highly evaluated this new type of invoice for its security and economy. The electronic bill will reduce expenses for printing and storing, as well as the inconvenience for businesses and tax authorities.

The service also has the advantage of being available around the clock, including holidays. Therefore, businesses can issue invoices continuously to ensure smooth operation.

A representative of the finance ministry affirmed electronic bills authenticated by tax authorities have full legal validity as other legal ones. However, enterprises must use specific software to issue and authenticate invoices.

Businesses can issue invoice by the free software ICA offered by the General Department of Taxation, their own LHD which allows users to issue and print out invoices, or the invoice processing software VAN which includes the issuing function.

After issuing an invoice by one of the three above-mentioned ways, representatives of companies will sign and send the invoices to VAN of the taxman for processing. VAN will exchange the information with the authentication software ICC and take back the authenticated invoices.

In addition, businesses and tax authorities can look up and check for authenticated invoices with ICE software.

Mammoth project in Soc Trang

The US$2.19-billion project to be realized in Soc Trang Province is not only India’s biggest investment project in Vietnam but also the biggest-ever foreign investment in the Mekong Delta.

Designed to have total capacity of 1,320MW, Long Phu 2 thermal power plant is slated to be operational in 2019. The project is one of the three thermal power plants of the Soc Trang Electricity Center. Long Phu 2 previously belonged to Song Da Corporation. However, this investor had to withdraw due to financial constraints. Meanwhile, the 1,200-MW Long Phu 1 plant invested by Vietnam National Oil and Gas Group will be put into operation next year.

The Long Phu 2 project also marks the comeback of Tata Group to Vietnam after the Indian giant’s US$5-billion steel project in the central province of Ha Tinh had come to a standstill due to site clearance problems.

According to India’s Live Mint, Long Phu 2 will pave the way for Tata’s expansion in Southeast Asia in response to the Indian Government’s Look East policy.

Soc Trang is among the poorest provinces in the Mekong Delta where 17% of the local households are poor, 2.4 times higher than the average of the region. FDI pledged in Soc Trang was only US$35.4 million, also the lowest in the region. In comparison, according to the General Statistics Office, the Mekong Delta has accommodated 838 operational FDI projects with combined capital of US$11.136 billion, making up 4.75% of the country’s total.

When Long Phu 2 is implemented, Soc Trang will improve its FDI attraction ranking in the Mekong Delta, jumping to the third position, behind only Long An and Kien Giang provinces.

In line with Vietnam’s Power Master Plan VII, there will be 57 coal-fueled thermal power projects with a combined capacity of 36,000MW by 2020 and 75,700MW by 2030, equivalent to 47% and 56% of the country’s total power output respectively.

In the Mekong Delta, aside from the Ca Mau Gas-Power-Fertilizer Complex and the Can Tho Thermal Power Center, thermal power plants such as Duyen Hai 1, 2 and 3 in Tra Vinh; Long Phu 1, 2 and 3 in Soc Trang; Song Hau 1 and 2 in Hau Giang; and Kien Luong in Kien Giang will be put into operation. All these power plants are coal-fueled.

Tata Power Co., an affiliate of Tata Group, will use coal imported from Indonesia or Australia to fuel Long Phu 2 power plant.

According to a master plan for national coal consumption until 2020 with a vision to 2030 approved by the Prime Minister, the domestic demand for coal will skyrocket. The Vietnam National Coal and Mineral Industries Holding Corporation estimates that coal needs for thermal power generation will increase by six million tons in 2015.

From 2016, Vietnam will have to import millions of tons of coal per year. This figure will rise to 20-30 million tons by 2020.

Currently, as no deep-water port capable of receiving big coal transporting vessels is available in the Mekong Delta, transporting coal on smaller ships or barges proves to be a feasible solution. In 2012, the Japan International Cooperation Agency (JICA) came up with a list of eight locations in the Mekong Delta for construction of coal transshipment ports, including those in Soc Trang, Nam Du (Kien Giang), Duyen Hai (Tra Vinh) and Hon Khoai (Ca Mau). At present, only one coal transshipment port is under construction in Tra Vinh, mainly for Duyen Hai 1, 2 and 3 thermal power plants. Therefore, research projects for deep-water ports or coal transshipment ports should be conducted and stable coal supply sources from major exporters such as Australia, Indonesia and Russia should be ensured before these plants are up and running.

During meetings with Soc Trang authorities, Tata Group leaders mentioned its plans to invest in a coal transshipment port around Tran De estuary to supply coal for thermal power plants in the Mekong Delta.

It is worth noting that coal-fueled power generation has certain impact on the environment. The US$2.19-billion thermal power project will benefit Soc Trang. Yet, the provincial authorities should pay close attention to environmental issues when the project is carried out.

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