BUSINESS IN BRIEF 7/9 Foreign investors extend bond sales Foreign investors have continued net selling bonds on the secondary market for the fifth straight week with a net value of over VND2.12 trillion (US$94.26 million), the highest in the year to date. They net offloaded nearly VND4.65 trillion worth of debt paper in August alone. Bao Viet Securities Company said in a report that foreign net selling was a matter of concern on the bond market. If foreign investors continue to be net sellers, the exchange rate between the Vietnam dong and the U.S. dollar as well as the forex market will face pressure in the next few weeks. Government bond coupons of different tenors moved sideways last week. The G-bond coupons of one-year, two-year and seven-year tenors dropped to 5.17%, 5.486% and 6.94% per annum respectively. In contrast, the bond yield for the three-year tenor was up to 5.906%, the five-year tenor to 6.75%, the 10-year-tenor to 7.09% and the 15-year tenor to 7.825%. According to the Hanoi Stock Exchange (HNX), trading volume of G-bonds on the secondary bond market rose sharply in August. The outright transaction volume totaled 430 million bonds worth VND46.2 trillion last month, up 34.3% month-on-month. Meanwhile, repo trading hit 208 million bonds valued at VND20.8 trillion, a 29.3% decline against the previous month. Outright transactions conducted by foreigners registered a total buying value of over VND4.5 trillion and a selling value of over VND8.9 trillion. G-bond sales on the primary market have been sluggish due to low demand. The HNX organized 30 auctions for G-bond sales and mobilized some VND7.83 trillion in August, down 49.9% against July. PM wants conductive environment for growth Prime Minister Nguyen Tan Dung has called for policies conductive for growth while combating inflation. The request was made at the Government’s two-day cabinet meeting ended Tuesday. Government ministers at the monthly meeting, chaired by the Prime Minister, agreed that economic growth was on track in the first eight months of this year despite unfavorable global economic conditions. A report of the Government highlighted improvements of major economic indicators in the period. The consumer price index dropped 0.07% in August against July and grew only 0.83% in the first eight months over the same period last year, and State budget collections were up 7% year-on-year. Foreign companies registered a combined US$13 billion for fresh and operational projects while foreign direct investment approvals rose by 7.6% year-on-year to US$8.5 billion. Demand improved in January-August, which is evident in a 10% year-on-year rise in retail sales of goods and services. Credit had increased 9.3% in the year to August 20. Dung told the meeting that the socio-economic development in the year to August had been positive, creating growth momentum for the remaining months of this year. He expected the country to achieve the targets for this year. However, the Government leader warned of major challenges for the economy as the world oil price plunge has cut into State budget collections and affected the country’s balance of trade. Economic restructuring and the implementation of Resolution 19 intended to improving the investment environment and national competitiveness has been slower than expected. In addition, farmers still found it hard to sell their products and declining prices of many farm products on the world market led to sharp falls in export revenues of Vietnam’s key products. Ministries and agencies were required to closely monitor developments in the world economy and prepare measures to minimize negative impacts on the local economy. The Prime Minister wanted relevant ministries to review public investments and map out a medium-term strategy to make public investments effective. “This is part of public investment restructuring,” he stressed. Dung told relevant ministries and agencies to spare no effort to stabilize the economy towards the year-end and control inflation in a way that supports economic growth. Regarding key targets for next year, the Prime Minister said the Government aims for gross domestic product growth of 6.7%, inflation of around 5%, export growth of 10% and development investments accounting for 31% of GDP. Early this year, the Government set targets for GDP growth of at least 6.2% and inflation of 5% this year. Firms can issue C/Os from Oct Local businesses may self-issue certificates of origin (C/O) form D when exporting their products to Laos, the Philippines, Indonesia and Thailand from October 5 this year in accordance with the ASEAN Trade in Goods Agreement (ATIGA), according to the Ministry of Industry and Trade. The ministry’s Circular No. 28/2015/TT-BCT says firms entitled to self-issue C/Os must be both manufacturers and exporters and have not been found violating C/O regulations for two straight years. In addition, minimum revenues from their exports to ASEAN using C/Os form D must be US$10 million in the proceeding year. Companies should have employees trained for issuing C/Os. They can apply C/O self-issuance documents and get approval at the Export-Import Department under the ministry or access www.ecosys.gov.vn. Companies are permitted to issue C/Os on their own for one year after they got approval. Meanwhile, enterprises must be responsible for storing documents at least three years to prove that their goods meet the existing regulations on C/O and meet other requirements. Firms selected to join a pilot scheme on C/O self-issuance can register to get the old form D of C/Os if they want. Le Thi Hong Ngoc, deputy head the Customs Control and Supervision Division under the General Department of Customs, said at a seminar on C/O in HCMC in April that enterprises self-issuing C/Os would be able to save time and reduce fees on C/O procedures. However, they will be fined when issuing wrong C/Os. ASEAN countries have applied this C/O issuing mechanism to two pilot projects. The first project has been applicable to all commercial enterprises, with the participation of Brunei, Malaysia, Singapore and Thailand, since 2010 and 2011. Laos, Indonesia and the Philippines have joined the second project applicable to production firms since 2012 and 2013. Vietnam did not join the second project until last September. ASEAN businesses joining the projects included 133 from Malaysia, 114 from Thailand, 54 from Singapore, 10 from Indonesia, three from the Philippines and two from Laos. Vuong Duc Anh of the ministry’s Export-Import Department said few businesses join the projects as they can issue C/Os on their own for selling goods to just certain ASEAN nations. They are concerned that tax agencies may refuse to offer tax incentives for their products. Malaysia probes into cold rolled steel coils imported from Vietnam The Malaysian Ministry of International Trade and Industry (MITI) has commenced an anti-dumping investigation on cold rolled steel coils imported from Vietnam, China and the Republic of Korea (RoK). The Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade said that CSC Steel Sdn. Bhd is the plaintiff of the case. According to statistics, Malaysia imported around 151,000 tonnes of steel worth US$110 million from Vietnam in 2014. The VCA urged relevant businesses to closely cooperate with the MITI to respond to all investigated queries.  Huge imports by state sector dent Vietnam's trade balance Vietnam's state-owned enterprises posted a trade deficit of US$13 billion in the first eight months, up 44% from the same period last year. Notably, the shortfall was 3.6 times higher than the country's trade deficit, the General Statistics Office of Vietnam recently reported. That means surpluses gained by other sectors failed to offset the deficit among SOEs.   The state sector's exports fell 2.5% from the same period last year to US$31.7 billion, while its imports went up 7.7% to US$44.7 billion. On the other hand, the foreign direct investment sector saw a trade surplus of US$9.4 billion after exports and imports increased by 14.7% and 23.2%, respectively, according to the report. Vietnam's exports increased by 9% year-on-year to US$106.3 billion, while imports rose 16.4% to US$109.9 billion. With a year-on-year rise of 80.2% to US$3.8 billion, automobiles were one of the imports that strongly increased in the January-August period, while mobile phones and their spare parts were up 36.6% to US$7.1 billion. Local production and consumption "hugely" relied on imported materials, the statistics office said in its latest report. Vietnam is now under big pressure to control its trade deficit for the rest of the year, as export revenues have been falling due to sharp declines in crude oil prices, according to the office. Moreover, the world demand is decreasing as an impact of China's economic situation, making it difficult for exports to rise, it added. Previously many foreign and local reports forecast that Vietnam will see a trade deficit of US$6 billion this year, after posting surpluses for three consecutive years since 2012. Southwestern Steering Committee and EVN sign agreement The Southwestern Steering Committee and the Electricity of Viet Nam (EVN) today signed a cooperation agreement in the southern Can Tho City. According to the agreement, both sides will enhance their cooperation to achieve political tasks, based on the ability and condition of each side. The Southwestern Steering Committee will partner with EVN and other relevant authorities to ensure the progress of the investment of the electrical development in the Mekong delta region. The Steering Committee will also help EVN to solve the problems related to the development of the power grid, compensating for land clearance of power projects and ensuring absolute security in the key electricity sector in the Mekong Delta. On its part, the EVN will sponsor a part of the fund to be contributed by theSponsoring Association for poor patients in the Southwestern Region. Also, it will support the social security works being implemented by the Steering Committee. Speaking at the signing ceremony, Duong Quang Thanh, the EVN's chairman, said the group will expedite implementation of the electric power transmission projects in HCM City and other provinces. The EVN will also focus on supplying electricity for shrimp farming areas in southern provinces, including Soc Trang and Ca Mau, said Thanh. Nguyen Phong Quang, Deputy permanent director of Southwestern Steering Committee, praised the contribution of EVN to the development of Southwestern region, especially the electrical supply to the Phu Quoc island. He urged both the committee and the group to share responsibilities regarding the lectrical projects in the region in future. During the ceremony, the EVN donated VND1.5 billion (US$66,622 ) to the Sponsoring Association for Poor Patients in the Southwestern Region to provide funding support for the treatment of poor children who find themselves in difficult circumstances in the region. Project to build $693mn expressway in southern Vietnam under consideration A project to build a multimillion-dollar expressway to link Ho Chi Minh City to neighboring Tay Ninh Province has been submitted to the Ministry of Transport for consideration, a project management agency has said. Project Management Unit No. 7 (PMU7) said it has sent the project to the ministry with a view to easing the overload on the Trans-Asia section from the city to the Moc Bai border gate in Tay Ninh that borders Cambodia to the west. The expressway is expected to be about 59km, running parallel to National Highway 22, from the intersection of Beltway 3 and Provincial Road 15 in Hoc Mon District to the Moc Bai border gate, the PMU7 said. The project is estimated to cost over VND15,727 billion (nearly US$693 million) in total, of which VND10,727 billion ($477.1 million) will be spent on phase 1 and the rest on phase 2, according to the unit. If approved, the project will kick off in the first quarter of 2017. Dozens of expressways have been built across Vietnam in recent years to meet the increasingly growing demand for travel. The longest expressway in the country is the 245km one that connects Hanoi to the northern province of Lao Cai. This road, which runs from the capital’s Noi Bai through the northern provinces of Vinh Phuc, Phu Tho and Yen Bai before reaching Lao Cai, was opened to traffic on September 21, 2014.   The $1.5 billion expressway has helped shorten the time to travel from Hanoi to Lao Cai from seven hours to 3.5 hours, according to the Vietnam Expressway Corporation, the road’s investor. Pleiku Airport reopens after runway upgrade Pleiku Airport in Gia Lai Province was reopened on September 1 after being closed for nearly six months for an upgrade project, following the transport ministry's request. The two-phase VND945 billion (US$41.19 million) upgrade project in the Central Highlands province was launched last September. The first phase was carried out even as the airport remained operational. In its second phase, the airport was closed for nearly six months for construction work on its runway. The runway was widened from 36m to 45m and its length was increased from 1,830m to 2,400m in order to accommodate the A321, Boeing 737 and other aircraft of similar size. In addition, the terminal was renovated to handle up to 600 passengers during the peak period. Pleiku Airport is the only one of its kind in Gia Lai and the neighbouring province of Kon Tum. When the airport was temporarily closed, passengers had to go to Phu Cat in Binh Dinh Province and Ban Me Thuot in Dak Lak Province to catch flights. At present, only national carrier Vietnam Airlines (VNA) is using the airport, with flights arriving from Ha Noi, Da Nang and HCM City. The carrier has reopened flight routes from and to Pleiku Airport as of September 1. On the occasion of the airport's re-opening, Vietnam Airlines is offering one-way tickets between HCM City and Pleiku for VND399,000 ($17.7), and for VND799,000 ($34.6) for flights between Ha Noi and Pleiku. The tickets can be bought till September 30 this year. Two budget airlines, VietJet Air and Jetstar Pacific, also plan to start operations at Pleiku Airport soon. Massive cultivation of pepper contains high risks Rapidly increasing area of pepper has destroyed agricultural planning in provinces in the Central Highlands of Vietnam meanwhile if diseases break out, causing massive death of pepper plants, the life- changing dream of farmers will be crushed. These will make the development of pepper become unsustainable. Mr. Pham Quang Muoi, head of the Department of Agriculture and Rural Development of Cu M’gar District in Dak Lak Province, said that the area of pepper unexpectedly shot up in the past three years, hitting 2,400 hectares. The price of pepper now has risen to VND200,000 per kilogram from VND170,000-180,000 per kilogram last year. If farmers have taken good care of their pepper plants, each hectare of pepper will yield around 4 tons of pepper, bringing in a profit of around VND700 million. There are not many of crops in the region that are able to produce such level of profit. Because pepper is currently the most profitable cultivar so many farmers have rushed to grow pepper. This situation has ruined agricultural planning for the region. Many places in the region are not suitable for cultivation of pepper but farmers still grow pepper plants, causing poor development, contamination, and death for pepper plants. Since 2014, more than 100 hectares of perennial trees in the district have been destroyed in order to make room for pepper plants, said Mr. Muoi. Meanwhile, Mr. Trang Quang Thanh, director of Dak Lak Province’s Department of Agriculture and Rural Development, said that Dak Lak is one of seven largest pepper growing provinces across the country. According to plan, the area of pepper will be 15,000 hectares by 2020 but the current area of pepper has exceeded 16,000 hectares. He emphasized that this was merely statistical figure and the actual figure might be much bigger. In the last two years, around 1,341 hectares of rubber trees in the province had been chopped down for cultivation of other crops, such as: pepper and macadamia. The fact that farmers rush to grow pepper will badly affect provincial crop structure. If the price of pepper drops in the future, farmers, again, will abandon pepper for another plant, said Mr. Do Ngoc Duyen, director of Dak Nong Province’s Department of Agriculture and Rural Development. Because of high pepper price, farmers in Gia Lai Province defied risks and authorities’ warnings to cultivate pepper plants. According to the plan, the area of pepper in the province was 6,000 hectares by 2015. However, by the end of 2014, the area already reached 13,000 hectares. 550 pepper poles of Le Huu Nguyen in Ia Pal Commune in Gia Lai Province’s Chu Se District were grown about two weeks ago but until now around 70 pepper plants were dead. He said that he unfortunately bought poor pepper saplings. Pepper plants of other farmers are also dying gradually. Many households were broke due to massive death of pepper. Figures in 2014 show that more than 216 hectares of pepper were dead in Gia Lai Province; 122 hectares in Dak Nong Province; and 1,400 hectares in Dak Lak Province. Lack of experience and knowledge has caused pepper productivity to lose by 30-40 percent or even completely lose. Unsuitable land will cost high investment capital but bring in low production. In addition, it contains high risk of pepper disease outbreaks. Moreover, pepper saplings in Vietnam are not of high quality, which makes it hard to control diseases on pepper. In order to ease difficulties for pepper, farmers in the Central Highlands provinces should be trained carefully. The Government should finance programs about sapling research. Provincial agricultural should develop pepper sustainably, aiming at stabilizing productivity instead of increasing it and encourage farmers to use biological measures to prevent diseases on pepper instead of chemical ones. Domestic auto producers face fierce competition as import tax falls Vietnamese car manufacturers will face fierce competition from low-cost cars imported from India and ASEAN when import taxes are sharply cut next year. The Vietnam Automobile Manufacturers Association (VAMA) estimated 200,000 vehicles per year would be sold in Vietnam in 2015, half of which were imported. The situation is worrying local car manufacturers due to the increasing number of imported vehicles. Imported cars currently face 50% and 70% import duties and excise taxes of from 45% to 60%. Meanwhile, local auto makers currently have to pay a tax of from 15% to 25% for imported components. It is thought that imported vehicles should hardly compete with locally made products, but the reality is the opposite. Many local auto manufacturers are worried that more imported cars are set to flow into Vietnam next year following the decreased import and excise taxes. From next January 1, completed vehicles imported from ASEAN countries will benefit from an import tax cut of 10%, bringing the tax down to only 40%. The Ministry of Finance is mulling over plans to cut excise taxes for mini cars to only 25% to 30% beginning from next July 1 for cars with engines smaller than 1,500 cubic centimetres. Vehicles with engines small than 2,000 CCs would enjoy an excise tax cut by 5%, bringing the tax to 40%. Due to such tax cuts, prices of complete imported cars with a cylinder capacity of less than 2,000 CCs from ASEAN to Vietnam would decreased by between USD2,500 and USD4,000 per car and from India by between USD1,500 and 2,500 each by the end of 2016. This would be a dramatic cut with the price cuts of between USD1,000 and USD2,000 each for locally made autos. After the tax cuts, the prices of completed imported vehicles would fluctuate at around USD20,000, which is comparable to Vietnamese cars. Vietnam’s auto industry is currently growing at an impressive rate of nearly 60% per year and an annual growth rate of 40% is expected to be maintained for a long time. However, most predictions show that imported vehicles are proving far more attractive than domestically-produced models. The General Statistics Office (GSO) said that Vietnam spent over USD1.9 billion on importing completed autos in the first eight months of this year, up 132% compared with the same period last year. The figure has already outstripped the 72,000 imported vehicles recorded last year. Thai firms profit from attractive retail market More Thai retail companies have entered Vietnam over the past two years and are proving popular with consumers, while asking questions of less competitive local rivals. Speaking at a recent business forum in Hanoi, Somhatai Panichewa, Director of Thai-invested Amata Dong Nai Company said more Thai have had to expand their operations abroad because of the domestic instability the country had experienced in recent years. Production costs in Vietnam are lower than in Thailand and Vietnam’s annual retail sector growth of 15%, combined with government investment incentives is proving attractive. “Thai goods may be 10% to 20% more expensive than Vietnamese products, but they have still sold well. The establishment of the ASEAN Economic Community and good opportunities presented by Vietnam signing up to several new free trade agreements has encouraged Thai investors,” Panichewa said. A delegation of 40 Thai footwear and garment companies has recently come to HCM City to seek investment opportunities. Thai firms have also eyed investment opportunities in the city for support industries, food, plastics and cosmetics. Pham Hong Hai, Director of HSBC Vietnam said Thai companies have also expanded their investment into petrochemistry; building materials and fashion in Vietnam. HCM City resident Nguyen Minh Phuong said that she liked Thai products although their prices were higher. Vu Vinh Phu, Deputy Director of the Hanoi Trade Department, said that many large Thai groups such as CP, BJC and the Central Group were present in Vietnam and had joined firms from South Korea, Japan and the US in increasing the competitiveness of Vietnam’s retail market. Bilateral trade between Vietnam and Thailand has also grown, but Vietnam has incurred a large trade deficit. Last year, Vietnam exported only USD3.5 billion worth of goods, while it imported up to USD7.1 billion of goods from Thailand in return. Remittances to HCM City up 13.2% in 8 months Vietnamese living abroad remitted around US$330 million in August, bringing the total remittances in 8 months this year to US$2.75 billion, 13.2% higher than last year’s same period. With current move, remittances to HCM City this year are likely to hit US$5.3-5.5 billion, higher than last year’s figure of US$5 billion, said the State Bank of Vietnam (SBV), HCM City branch. On August 31, the exchange rate of US dollar and VN Dong at commercial banks rise VND15-30 higher than late last week. The highest rate for US dollar was seen at Eximbank from VND22,480 to VND22,510 per US dollar. Meanwhile, the rate at Vietcombank raised VND15 to VND22,505/USD. The price of US dollar in the flea market continued to decline to VND22,650/USD, down VND50 compared to previous week. Food safety concerns over traditional moon cakes Sales of moon cakes, the Mid-Autumn Festival’s iconic speciality, may have increased, but the quality remains a big concern for Hanoi authorities. As the Mid-Autumn Festival, held on Lunar August 15th, is drawing near, shops have started rolling out moon cakes. On Hang Buom Street, ingredients to make the cakes are available in plastic cans or bags with hand-written descriptions which lack expiry dates. Thu Ha, an online seller, said she sold about 30 kilos of various kinds of powder each day. However, when asked where the ingredients came from, she could only say they were imported. On August 26, local authorities destroyed nearly a tonne of moon cakes of unknown origin. Nguyen Viet Cuong from Hanoi Health Department said they started carrying out inspections at manufacturers as well as package and ingredients providers. Their focus this year was on traditional villages including Xuan Dinh, Xuan Tao and La Phu. Vu Vinh Phu, president of Hanoi Supermarket Association said "It's because we can't control the origin of the ingredients, production conditions and distribution system for these cakes. Moreover, trade is often done without invoices. It's not enough if authorities only carry out inspections when the occasion is near as there are thousands of places churning these cakes out." Vietnam, Venezuela look to US$1-2 billion in bilateral trade Vietnam and Venezuela have agreed to enhance trade cooperation and support enterprises to access their respective markets to bring two-way trade to US$1-2 billion in the next few years. President of Venezuela Nicolas Maduro Moros, who is in Vietnam for a visit, and his Vietnamese counterpart Truong Tan Sang reached agreement at a meeting in Hanoi on August 31. Both heads of state shared a view that two-way trade between Venezuela and Vietnam which stands at below US$100 million a year did not match the potential of the two countries. Sang said the Venezuelan President’s visit would help deepen cooperation between Vietnam and Venezuela. Meanwhile, Moros said he expected to learn development lessons from Vietnam and that Venezuela always considered Vietnam an important partner. The two leaders agreed that both countries should improve the efficiency of bilateral cooperation mechanisms like the Inter-Governmental Committee for Economic-Trade and Scientific-Technological Cooperation and the political consultation mechanism between the two foreign ministries; instruct ministries and agencies to review and complete legal frameworks by negotiating and signing cooperation deals in specific areas, as well as create favorable conditions for businesses to implement projects. On the same day, Moros met with Vietnam’s Party General Secretary Nguyen Phu Trong, Prime Minister Nguyen Tan Dung and National Assembly Vice Chairwoman Tong Thi Phong. The Prime Minister and Venezuela’s President agreed to enhance cooperation in many fields, especially agriculture, energy, oil and gas, and fisheries. Venezuela has 30 million hectares of fertile agricultural land for large-scale farming and is prepared to carry out agricultural cooperation projects with Vietnam, the visiting president. Venezuela is ready to help Vietnamese enterprises do business in the country, he said, adding Venezuela imports up to 85% of necessities and wants Vietnam to supply part of the goods demand. As part of his Vietnam visit, Moros met representatives of Vietnamese enterprises at the Vietnam Chamber of Commerce and Industry (VCCI) in the afternoon. He pledged Venezuela would open up the market for Vietnamese firms. Pepper exports projected at US$1.2 bil. this year The Vietnam Pepper Association (VPA) has forecast revenue from pepper exports this year would equal last year’s level of US$1.2 billion owing to higher prices on global markets though local output is lower than in 2014. Tran Duc Tung, administrative manager of VPA, said Vietnam could export 130,000 tons of pepper this year, down 26,000 tons compared to the previous year. Tung said the association made the pepper export projection based on data on pepper output in pepper growing localities and the volume of pepper in stock. A recent study of VPA showed pepper output in provinces in the southeastern and Central Highlands regions has fallen significantly compared to the previous crop. The association estimated a drop of up to 40% in pepper output in some parts of the region. Tung attributed the decrease in pepper export volume this year to the impact of bad weather on pepper production in many localities. But the export price of the commodity always exceeded US$9,000 per ton in the past eight months of this year. Tung said that for Vietnam’s pepper exports accounts for half of the world’s total, the world price of the commodity has tended to go up following news about a reduction in pepper output in the country. According to the Ministry of Agriculture and Rural Development, the country exported 104,000 tons of pepper worth US$978 million in January-August, falling 22% in volume but only 1% in value. The average pepper export price in the period surged 28% year-on-year to US$9,373 per ton. A kilo of pepper was sold from VND199,000 (US$8.85) to VND204,000 in the major pepper producing regions on August 31, up VND2,000 per kilo against previous days. Real estate inventories in HCMC down Real estate inventories in HCMC have dropped sharply this year as the market has been steadily recovering, according to the city government’s  report on economic restructuring and growth in 2011-2015.     The city government credited the decrease in real estate inventories to a range of measures such as helping property investors take out low-interest loans, dividing large apartments into smaller units and converting commercial housing projects into social ones. These measures have enabled investors to make their products affordable.      There were 14,490 apartments in stock at the end of 2012 but 76.5% of them, equivalent to 11,088 apartments, had been sold as of August. Nine projects with 8,175 apartment units have been converted into social housing projects while 7,774 units at 11 other projects have had their sizes scaled down. Another project having 360 apartments have been transformed into a 500-bed hospital. According to the report, apartments of less than 70 square meters and costing less than VND15 million (US$666) per square meter have sold well this year. The development of infrastructure facilities like the expansion of Hanoi Highway, the opening of HCMC-Long Thanh-Dau Giay Expressway and the Hiep Phuoc port-urban area have encouraged companies to construct many buildings along these streets to provide more products for the market. A number of luxury apartments near the streets have been put up for sale such as those of the Estella Heights, the Krista, Vista Verde, Gateway and Vinhomes Central Park projects. Novaland Group has invested in a dozen projects with nearly 10,000 apartment units in the east of HCMC. ThuDuc House has broken ground for TDH-Phuoc Long apartment building project in District 9 while N.O.H Company has started work on the First Home Premium Khang Viet housing project in the same district. The HCMC government expected the sector to grow 8% this year. This growth will help fuel growth in the financial, labor and construction material markets, and contribute more to the city’s budget collections. Credit growth at three-year high in HCMC Total outstanding loans at HCMC-based banks in January-August grew around 6.5% compared to late 2014, the highest growth in three years, according to a report of the central bank’s HCMC branch. Of the growth rate, outstanding loans in Vietnam dong hit VND975 trillion (US$43.3 billion), rising by 7.94%, but foreign currency loans dropped 1.23% at VND162.5 trillion. Foreign-currency lending has fallen in recent months as enterprises have shifted to loans in Vietnam dong due to rising risks of the volatile foreign exchange rate. This year the greenback has strengthened by around 5% against the domestic currency. According to the report, interest rates for short-term foreign currency loans hovered in the range of 3.97% and 4.79% per annum while lending rates in the local currency were around 7% per annum. Due to growing forex risks, borrowers opt for Vietnam dong loans, leading growth in foreign-currency loans to slow after a 20% increase in 2014. Between January and July, economic improvement and higher capital demand buoyed credit growth at local banks. Lenders reported credit growth of 6% in the period, up from 4.25% in 2014’s January-July. In the same period in 2013, local banks obtained credit growth of 4.72% while they experienced negative growth in the first seven months of 2012. Medium to long-term credits made up a larger proportion and posted steady growth since early this year. Ending August, medium and long-term loans had totaled VND626.5 trillion, up 13.45% compared to late 2014, while short-term credits had dropped 0.9% at VND511 trillion. This is a good sign for banks as corporate borrowers have taken out loans to expand production and business instead of supplementing working capital. The report also pointed out that deposit rates in August inched up by 0.02 to 0.2 percentage point against July. Deposit rates in Vietnam dong were 4.81-5.11% per annum for tenors of six months or less and 5.37-6.09% for tenors from six to 12 months. Meanwhile, local banks offered depositors interest rates of 6-7% for tenors of 12 months or longer. Gold trading in the city surged in July due to strong price fluctuations of the yellow metal. Banks and enterprises bought around 151,300 gold taels, jumping 50.35% from the previous month, while selling over 158,000 gold taels, a 46% improvement. Few agricultural cooperatives perform well Only 10% of agricultural cooperatives operate efficiently and make profit, according to the Ministry of Agriculture and Rural Development. The ministry unveiled the small number of efficient cooperatives in a development scheme for collective farming in 2016-2020. By the end of 2004, Vietnam had had nearly 10,500 agricultural cooperatives. The number consisted of 7,750 cooperatives in agricultural services and about 2,695 cooperatives in cultivation, breeding, irrigation, aquaculture, forestry and salt production. Annual sales of the cooperatives total a modest VND1 billion on average as their production facilities are outdated and governance is weak. The ministry also pointed out small-scale production and a lack of supporting policies as among the reasons behind the poor performance of many agricultural cooperatives. As part of the scheme, the ministry draws up a series of measures to help agricultural cooperatives improve performance towards 2020 with a focus on human resource development and supporting programs. The ministry plans to develop strong cooperatives in tea, coffee, seafood and fruit production and processing, among others in the Central Highlands and Mekong Delta regions. The ministry calculates VND5 trillion will be needed to enable agricultural cooperatives operate efficiently in 2016-2020. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR