BUSINESS IN BRIEF 18/9

Ghost month overcome

In years gone by the “ghost month” (lunar July, solar August this year) has more often than not seen local investors, especially real estate investors, become reluctant to purchase or invest in new projects. The positive development in liquidity during this year’s ghost month, however, has pleased many investors.

One of the main reasons for the positive signs in the property market during the ghost month is the change in thinking among many homebuyers. They now believe new projects with good infrastructure is the most important factor rather than focusing on spiritual matters. They also see that they may lose out if they don’t make a decision quickly.

Many investors therefore continued with project sales during the ghost month and homebuyers seemed less afraid to buy a house during a month that has traditionally seen few sales.

Since the beginning of the ghost month a number of real estate investors in Hanoi announced they would conduct sales or begin new projects. The Dat Xanh Mien Bac Real Estate and Services Joint Stock Company was probably the company to reap the most success during the ghost month, opening sales of remaining houses in its Park Hill projects. Mr. Vu Cuong Quyet, General Director of Dat Xanh Mien Bac, said that during the ghost month in the last two years the company has seen its business results exceed expectations.

On September 12 (the last day of the ghost month), many projects opened sales and all investors were satisfied with the results. For example, the BIM Group opened sales at its Lotus Residences project, Vingroup opened sales at Vincom Shophouse Hai Phong, and Dat Xanh Mien Bac held sales at its CT1A-CT1B apartment project in Hoang Quoc Viet, Hanoi.

In the south, many businesses also announced good results during the ghost month. The Saigon Thuong Tin Real Estate JSC (Sacomreal), after selling 216 villas at Jamona Home Resort during the month, now plans to open sales for 200 apartments in the project’s second phase this month.

According to Mr. Quyet, the solid sales during the ghost month were due to a change in spiritual concepts among homebuyers. "Other major purchases, such as motor cars and motorcycles, also saw pretty good sales,” he said. “Of course, the product must be good and the sales policy must be reasonable.”

Projects opening for sale during the ghost month made many concerned that, after a period of rising prices and increasing liquidity, investment opportunities would be less. However, Mr. Nguyen Tran Nam, Chairman of the Vietnam Real Estate Association (VNREA), said that housing demand is still growing strongly. Opportunities remain for businesses to benefit when they understand the market and have sufficient capital.

In talking about the risk of creating a fake fever in the real estate market, General Secretary of the VNREA Tran Ngoc Quang said he believes it won’t be easy to create such a fever in property because both buyers and sellers are now more "cautious" than before.

However, the possibility that the market may see higher prices and greater liquidity over the remaining months of this year and early 2016 due to ongoing demand is still large, he said.

BIDV shares sink after double hit

Shares in the Bank for Investment and Development of Viet Nam (BID), the second largest listed bank by market capitalisation in the country, were unexpectedly removed from the two exchange-traded funds, Market Vectors Vietnam (VNM) and FTSE Vietnam.

Late Tuesday on Market Vectors ETFs' website, it announced it would remove BID shares from the VNM Index, just two days after the fund declared it would add shares in BID into the VNM Index in the third-quarter Index review.

Following the VNM ETF decision, Europe-based FTSE Vietnam ETF also announced yesterday it would delete BID shares from its Index in the third-quarter Index review, revoking its statement on September 4 that it would include BID shares in the FTSE Vietnam All-Share Index and FTSE Vietnam Index.

This is unprecedented in the history of Viet Nam's securities market.

Both VNM ETF, managed by the New York-based investment firm Van Eck Global, and FTSE Vietnam ETF under Deutsche Bank track the performance of the largest and most liquid companies in Viet Nam.

BID shares took a big hit yesterday as the shares dropped to the floor price capped at 7 per cent per day on the HCM Stock Exchange following the information.

They rose to the daily ceiling limit of 7 per cent in the two previous sessions after the information of being added to the VNM Index was revealed.

BID's prices climbed nearly 24 per cent from September 4-15, shooting from VND23,000 ($1.02) to VND28,500 ($1.27) a share, after FTSE Vietnam Index and VNM ETFs announced they would include the BID shares in their index portfolios.

Foreign investors also bought more than 10 million BID shares during this period, including 5.46 million on Tuesday.

Many stock analysts had previously predicted the BID share price could climb to VND30,000 ($1.33), which helped keep demand for the shares at a high level.

The last 10-day average trading volume for BID reached more than 2.8 million shares, higher than the average of 2.2 million shares in August.

In its announcement on September 23, VNM ETF seemed to miscalculate the number of BID final float shares, which it estimated to be 718 million shares (total outstanding shares of 3.41 billion shares minus the number of State holding of 2.69 billion shares).

This lifted the free float ratio (final float shares divided to total outstanding shares) to 21 per cent, higher than the minimum free-float ratio of 5 per cent set by the ETF.

However, the total outstanding shares in fact were just 2.81 billion shares as more than 600 million shares have yet to be listed on the exchange. This made the free-float ratio just 4.2 per cent, lower than the minimum rate of 5 per cent.

According to analyst Bach Duong on the financial website ndh.vn, BID's price will not decline sharply in the long term thanks to its financial strength.

The bank posted a pre-tax profit of almost VND3.15 trillion ($140 million) in the first six months of this year, up 27.8 per cent over the same period of last year. By June 30, its total assets reached VND724.8 trillion ($32.2 billion), up 11.5 per cent since the beginning of the year.

Samsung Vietnam rejects rumor of cellphone production relocation over tax break expiration

Samsung Vietnam has denied a rumor about its relocation of an operational mobile phone production facility from Bac Ninh Province in the northern region to a neighboring locality.

A representative of the electronics firm told Tuoi Tre (Youth) newspaper that there is no such thing as moving its existing production base to Thai Nguyen, another northern region, following the expiration of tax incentives offered by Bac Ninh.

Though the revenue generated by the Bac Ninh plant, which is located in the Yen Phong Industrial Park 1, went down in the first quarter of this year, it would not be the reason for any relocation, the representative said.

The main reason for the revenue decrease is that Samsung Bac Ninh is the investment stage with a large number of machines and equipment being assembled so that plant can produce premium phone lines like the Galaxy S6 and Galaxy S6 Edge with metal frames, he said.

"Even though there are some fluctuations, the revenue the plant is expected to earn until the end of this year will remain equal to that of 2014 or only slightly fall," the representative added.

According to the People's Committee of Bac Ninh, a drop in production at the Samsung plant has shrunk the value of the province’s industrial production in 2014 compared with 2013, the first time ever.

Moreover, the reduction is expected to last through 2015, the local government said.

Data from the local Customs Department also showed a difference between the growth rate of export and import of Samsung’s plants in Bac Ninh and Thai Nguyen.

In the first quarter of this year, Samsung Vietnam posted over $3.6 billion in exports from Bac Ninh, down nearly 40 percent year on year, while imports hit more than $3.1 billion, down 39 percent year on year.

Meanwhile, the exports and imports at the Samsung plant in Thai Nguyen reached $3.6 billion and $3.7 billion, a whopping 4,600 percent and 1,400 percent surge year on year.

The Samsung Bac Ninh project has been operational since April 2009, enjoying a corporate income tax exemption in the first four years.

The facility has paid corporate income tax since 2013.

In March 2013, Samsung invested $2 billion in building the Samsung Thai Nguyen high-tech complex with similar incentives as those the Samsung Bac Ninh plant has enjoyed.

In 2014 the South Korean electronics giant continued to pour $3 billion more into the Thai Nguyen facility.

The Bac Ninh Customs Department said Samsung will consider focusing its production in a place with the lowest cost to maximize profit, and the large-scale Samsung Thai Nguyen facility is still enjoying a zero percent corporate income tax rate.

HCM City approves three residential projects

Ho Chi Minh City People's Committee has approved three residential projects proposed by local investors and valued at more than VND3.2 trillion (US$142 million).

The most expensive proposal is the six-year residential project, to be developed by Tien Phuoc Real Estate Joint Stock Company at a cost of $107 million. The project, located in Binh Chanh district of South Urban Area, will be built from 2015 to 2020.

The other projects to receive approval are Dang Thanh condominium and Building C & D of the Residential Condominiums and Commercial Complex, with total investment capital expected to reach $13 million and $22 million, respectively.

Dang Thanh expects to open in 2016 and Building C & D in 2018. Both projects are located in districts within the HCM central urban area.

Dong Nai, Indian businesses seek partnership

More than 30 Indian businesses and about 60 Vietnamese firms in the southern province of Dong Nai joined a trade exchange forum on September 16 in Dong Nai, aiming to seek stronger partnership.

The Indian firms expressed their interest in investing in agricultural product processing, animal feed and fertilizer production.

Arun Kumar Saraf, Chairman of the Kolkata Chamber of Industry and Commerce, held that strengthening trade links among Indian and Dong Nai businesses will create opportunities for both sides to expand investment partnership in areas of shared interest.

Meanwhile, Nguyen Hoa Hiep, Director of the Dong Nai Department of Industry and Trade, said that favourable trade and tax policies for Indian firms under the ASEAN-India free trade agreement will be a good chance for enterprises of Dong Nai and India to increase import and export activities and expand market.

According to the provincial Department of Industry and Trade, Dong Nai currently has 35 industrial parks, including 31 operating ones. The parks are hosting 1,200 foreign-invested enterprises and 600 domestic ones. Dong Nai is leading localities nationwide in exports, contributing 9 percent to the country’s total value.

In the first nine months of this year, the locality’s exports are estimated at 10 billion USD, with hard currency earners being apparel, footwear, wood and wooden products, electronics and spare parts. Its imports are over 9.8 billion USD.

Last year, Dong Nai exported over 187 million USD worth of goods to India . The figure was 129 million USD in the first nine months of this year.

Dong Nai mainly shipped to India agricultural and aquatic products, plastic material, fibre, confectionary, rubber, steels and equipment.-

Vietnam, India seek flourishing trade ties

The thriving Vietnam-India commercial partnership was the highlight of a forum held in Ho Chi Minh City on September 16.

According to Vo Tan Thanh, Vice Director of the Ho Chi Minh City branch of the Vietnam Chamber of Commerce and Industry, India, with its population of 1.2 billion people, is among the top ten trade partners of Vietnam, while Vietnam is ranked 28th for the India.

The two countries’ trade deficit has seen a recent downward trend, Thanh noted.

President of India’s Merchant Chamber of Commerce and Industry (MCCI) Arun Kumar said underscoring the important role of ASEAN, his Government has initiated the “Act East” policy.

Janal Sheth, Vice President of the Federation of Gujarat Industries (FGI) who is leading a delegation of 30 local firms on an ongoing visit to Ho Chi Minh City, considered Vietnam an attractive investment destination in the region.

He shared that his delegation’s visit aims to better understand the market, seek partnerships and promote the Indian business climate, saying agriculture, food processing, biotechnology and mining hold great cooperation opportunities.

Tat Thanh Cang, Vice Chairman of the municipal People’s Committee, lauded the trade promotion programmes carried out by the two governments as having benefited business communities.

He stated that authorities in the southern hub always welcome and support Indian companies to enter the city.

Vietnam and India generated more than 5.6 billion USD from bilateral trade last year, a significant increase from 1 billion USD in 2006. In the first seven months of 2015, the figure reached over 3 billion USD, paving the way for a target of 15 billion USD by 2020.

Vietnam's key exports to India include mobile phones, rubber, cashews, porcelain, iron and steel and wooden products, while it imports mainly cars, drugs, garment and textile feedstock, chemicals, machinery, building materials and others.

In the past eight months, Ho Chi Minh City alone shipped goods worth about 184.7 million USD to India, an annual climb of 3.31 percent. During the period, it imported Indian commodities valued at around 356.9 million USD, up 9.06 percent year on year.

Conference enhances understanding of ASEAN Economic Community

Local firms’ preparations for the impact of the formation of the ASEAN Economic Community (AEC) by year’s end was the focus of discussions at a conference in Ho Chi Minh City.

The September 16 event, jointly organised by the Central Committee’s Commission for Popularisation and Education in Ho Chi Minh City and the Ministry of Industry and Trade, drew the participants from media agencies from 22 southern provinces and cities.

Luong Hoang Thai from the Ministry highlighted the opportunities presented to Vietnam by joining the AEC, saying that it will drive economic reform in Vietnam.

The formation of the AEC helps expand export markets for Vietnamese products while improving domestic production efficiency thanks to competitive material and foreign investment sources, Thai said.

Meanwhile, experts reviewed concerns over challenges from the AEC for local firms in the context of high competitiveness among regional markets.

Publicity campaigns have been conducted to raise community awareness of the opportunities and challenges from the AEC in an accurate and timely fashion, Thai said.

Vietnam travel firms join international tourism fair in Moscow

Many Vietnamese travel firms are attending the ongoing 21st International Trade Fair for Travel and Tourism 2015 in Moscow, Russia, with the hope of bringing in Russian customers.

Nguyen Quoc Hung, Deputy Head of the Vietnam National Administration of Tourism (VNAT), said Vietnamese firms are at the fair to bring Russian tourists back to Vietnam.

After earlier waves of Russian tourists coming to Vietnam, from the end of 2014 to the first half of 2015, the number of Russian visitors has decreased 30-50% due to Russia’s economic difficulties.

Despite a slight increase in the past months, bringing Russian tourists back to Vietnam is still a challenge, he added.

The VNAT’s goal is to increase the number of Russian tourists arriving in Vietnam by 10% from now to the end of the year.

In order to achieve the goal, travel firms are creating products and packages that suit Russian travellers.

On the sidelines of the fair, the Ho Chi Minh City People’s Committee organised a conference on connecting HCM City tourism businesses in Russia.

Conference boosts agricultural export

Agricultural experts gathered on September 16 at a conference in Hanoi to seek ways to boost farm produce exports.

The event was organised by the Institute of Policy and Strategy for Agriculture and Rural Development.

Director of the Institute Nguyen Do Anh Tuan pointed to the recent uncertainty of the global and regional economies as impacting domestic agricultural exports.

Vice Chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP) Nguyen Huu Dung stressed the need for developing new high quality products to ensure the sustainable export of agricultural products.

Dung also underscored the significance of the competitiveness of farm produce while ensuring income for stakeholders in agricultural production.

Meanwhile, Cao Xuan Thanh from the Vietnam Timber and Forest Products Association (VIFORES) called for incentives for developing forests to ensure timber material supply for wooden product export and reducing reliance on imports.

Others suggested expanding markets for exporting key agricultural products like coffee, pepper, cashew nuts, wooden products and rice.

Agro-fishery-forestry export turnover in the first eight months of 2015 decreased by 4.8 percent year-on-year to 19.31 billion USD, according to the Ministry of Agriculture and Rural Development.

Japanese-invested projects benefit Binh Duong

Japanese-invested projects have proved effective and significantly contributed to economic development in the southern province of Binh Duong, said Chairman of the provincial People’s Committee Tran Van Nam.

Japanese investors have to date run 232 projects totalling approximately 5 billion USD in the locality, with a focus on electronic components, pharmaceuticals and high-quality products.

Locals are most excited about the Aeon Binh Duong Canary shopping centre, which is operating effectively.

Most recently, a series of projects to develop the property market, transport infrastructure and smart buses are underway in the province.

Japanese-invested projects have also generated jobs for tens of thousands of local labourers.

Binh Duong is currently ranked second in the country in FDI attraction. In the first seven months of this year, the province lured over 1.2 billion USD in FDI, surpassing the yearly target of one billion USD. 

Deal inked on Yen Vien logistics centre project

The state-owned Vietnam Railway Corporation (VNR) inked a build-operate-transfer (BOT) deal with Indo Trans Logistics Corporation (ITL) on September 16 to build the Yen Vien Railway Logistics Centre in Gia Lam district of Hanoi.

According to VNR Chairman Tran Ngoc Thanh, the new logistics centre will boost the container-handling capacity of Yen Vien railway station by 3-5 times and its goods-handling capacity by 2-3 times while reducing handling times.

The first phase of the project will begin on October 10, 2015 with total investment of 90 billion VND (about 4 million USD) while additional 5-6 twinsets (a set of two railroad cars) will be put into operation in routes linking Yen Vien with Hai Phong Port in Hai Phong city, Cai Lan International Container Terminal (CICT) in Quang Ninh northern province and Song Than Industrial Park in Binh Duong southern province.

The project also includes the construction of a 19,000-square-metre warehouse area.

Customs procedures for export and import will be conducted in the new centre once it is completed.

The BOT contract will allow ITL to operate the Yen Vien Railway Logistics Centre in 23 years.

Int’l plastic, rubber exhibition kick offs in HCM City

The 15th Vietnam International Plastic and Rubber Industry Exhibition (Vietnam Plas, Vietnam Rubber 2015) opened at the Saigon Exhibition and Convention Centre in Ho Chi Minh City on September 16.

The event has received favourable feedback for the past 14 years, having been organised annually in Vietnam, Cambodia, Myanmar and Bangladesh.

Co-hosted by the Vietnam Plastic Association and the Vietnam Rubber Association, the event aims to disseminate the two sectors’ leading brands and latest machinery.

According to Le Ngoc Trung from the Ministry of Industry and Trade, the country’s plastic export turnover has constantly increased in recent years. Vietnam is the third biggest rubber manufacturer and the fourth largest natural rubber exporter.

He underscored the exhibition will create constructive conditions for enterprises both home and abroad to source materials, exchange information and learn about advanced technologies in an attempt to improve their competitiveness.

According to the Organising Board, this year’s event features nearly 400 stands displaying products of over 300 enterprises from 10 countries and territories worldwide such as Singapore, the Republic of Korea, Japan and China.

The event runs until September 19.

Vietnamese official greets Japanese Credit Saison leader

Vietnam will create conditions for foreign enterprises to land investments in the country, including Japanese Credit Saison Co., Ltd – a financial service provider – while collaborating with businesses to address difficulties for more efficient cooperation.

Politburo member and Head of the Communist Party of Vietnam Central Committee’s Commission for Organisation To Huy Rua affirmed that at a meeting with Hiroshi Rinno, Credit Saison General Manager, in Tokyo on September 16.

The meeting was part of activities in the framework of a Japan visit by a high-ranking delegation led by Party General Secretary Nguyen Phu Trong.

At the event, the Vietnamese official expressed his hope that Credit Saison will expand their operations in Vietnam and contribute to the country’s socio-economic development.

For his part, Hiroshi Rinno pledged to enhance the company’s effectiveness and seek solutions to speed up projects in Hanoi and Ho Chi Minh City.

He underscored that Credit Saison will prioritise training Vietnamese staff to draw more customers in the Southeast Asian nation.

Credit Saison is mainly engaged in providing financial services such as credit card issuance, credit guarantee, and developing Internet service and applications for smart phones. The company has 35 million credit card holders and 11 million Internet users with a network of branches in China, Indonesia, Singapore and Vietnam.

The company opened its branches in Ho Chi Minh City in 2007 and Hanoi in 2012, providing a line-up of services including financial consulting and consumer loans.

VN earns 425 mln USD from wood exports to China in 6 months

Vietnam’s wood sector pocketed 425 million USD from exports to China in the first half of this year, ranking second among Vietnamese exports to China behind cassava.

The information was released by the Vietnam Timber and Forest Product Association (Viforest) at a seminar on the state and trend of Vietnam-China wood rrade from 2012-2014 held in Hanoi on September 15.

Woodchips, sawn timber, furniture, planks and round wood are important products that help the local wood industry enjoy trade surplus with China , with the first accounting for 60 percent of the total wood export value.

However, most Vietnamese wood products shipped to China are raw products with low added value, said Viforest General Secretary Nguyen Ton Quyen, citing that of 940 million USD in wood export turnover to China, 700 million USD was from raw products.

He added that Vietnam also bought many wooden products from China , with an import turnover of 121 million USD in the first six months of 2015.

According to participants, wood trade between Vietnam and China will be greatly affected by regulations in free trade agreements, including the ASEAN-China Agreement on Trade in Goods.

The agreements will create opportunities for Vietnam to expand the consumption of its wooden products in China and vice versa, they noted.

Vietnam, Cuba strengthen cooperation on finance

Vietnam is willing to share experiences, provide research documents and send experts to exchange views on financial matters with Cuba, according to Minister of Finance Dinh Tien Dung.

The minister made the remarks during a working session with visiting Cuban Minister of Finance and Prices Olina Pedraza Rodriguez in Hanoi on September 16.

Dung briefed his guest on Vietnam’s achievements in the financial sector, the focus of economic reforms and financial strategy orientations through 2020.

He also mentioned the need to improve national competiveness and investment environment.

For her part, Rodriguez said Cuba is gradually removing obstacles to economic development, adding that the country is prioritising foreign investment attraction with a target of drawing 6 billion USD per year.

On the occasion, the two sides signed a memorandum of understanding on cooperation during the 2016-2020 period.

Solutions sought for Central Highlands firms in Cambodia

Enterprises in the Central Highlands region were offered a chance to meet and share the difficulties they are facing in operating in Cambodia on September 15.

According to the Steering Committee for the Central Highlands Region, there are now 45 firms in the region and southern Binh Phuoc province – mainly involved in rubber planting, wood processing and mining – running business in Cambodia’s northeast provinces with a total registered capital of 23 trillion VND (1.01 billion USD).

Most firms agreed that the legal environment is not favourable, as preferential policies for investors have not been implemented well and administrative procedures are relatively complicated.

Double taxation is also a disadvantage for them, they said, adding that weak infrastructure hinders trade exchange.

They proposed the Vietnamese Government, ministries and sectors design and issue mechanisms relating to foreign currency and credit while continuing to simplify paperwork to reduce the time spent on applying for investment licenses to Cambodia.

They also suggested the Government work with the Cambodian side to carry out specific regulations on labour cooperation, double taxation avoidance and decrease of visa fees for Vietnamese labourers working on projects in Cambodia.

Permanent Deputy Head of the steering committee Tran Viet Hung said that the proposals will be submitted to the Government and ministries to work out appropriate solutions.

The committee also asked for strengthened senior meetings and visits and the establishment of working groups to inspect the implementation of cooperation projects, he added.

HCM City promotes trade in Russia

A conference on trade and tourism promotion of Ho Chi Minh City was organised in Moscow, Russia on September 15 by the Ho Chi Minh City People’s Committee and the Vietnamese Embassy in Russia.

Speaking at the conference, Vice Chairman of the Ho Chi Minh City People’s Committee Nguyen Thi Hong and Ambassador to Russia Nguyen Thanh Son affirmed that Vietnam and its southern hub treasure Russia as a friend and a reliable comprehensive strategic partner and are dedicated to bolstering bilateral cooperation towards the development and prosperity of the two countries and their peoples.

Vietnam’s signing of a free trade agreement with the Eurasian Economic Union last May has paved the way for the country to increase trade with Russia, Son said, adding that the two nations should stand together and support each other in economics, trade and tourism, especially as Russia has penalties imposed on it by the European Union.

The event provided a platform for more than 200 businesses from Ho Chi Minh City operating in Russia and local enterprises, most of which are from the Russian Far East territory, to exchange practices and seek business opportunities. Dozens of deals were inked at the conference.

Some 27 enterprises from Ho Chi Minh City also introduced over 300 types of products in an exhibition on the sidelines of the conference.-

Japan’s Wakayama interested in farm production with Vietnam

A business delegation from Wakayama, one of the nine prefectures of Japan’s Kansai region famous for agriculture and fishery, will come to Vietnam this November to explore the investment environment.

Wakayama representatives and businesspeople announced the plan after attending a seminar on cooperation in agricultural production and processing held in Wakayama by the Vietnamese Consulate General in Osaka, Japan on September 15.

Some 80 local businesses operating in mechanical manufacturing, agriculture, fishery, banking, services, and human resource training were updated on Vietnam’s economic development as well as the latest policies and regulations on investment and trade.

Representatives from the Japanese Kansai region’s Bureau of Economy, Trade and Investment (METI-Kansai) said Vietnam is the top priority destination of Japanese businesses.

Japanese enterprises spoke of business opportunities in Vietnam, arising from the establishment of the ASEAN Community, to which Vietnam is a member, and the country’s participation in the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP).

They also expressed hope that the Vietnamese Government will make it easier for Japanese businesses in terms of investment, licensing, tax and customs procedures.

Wakayama has earlier showed its interests in partnership with Vietnam by signing a Memorandum of Understanding on cooperation with the Vietnamese Ministry of Agriculture and Rural Development (MARD) in March, 2015.

Vietnam's economy likely to lag behind neighbors in 20 years

It will be not easy for Vietnam to catch up with the bigger economies in the region in the next 20 years without thorough reforms, economists have said.

Nguyen Dinh Cung, chief of the Central Institute for Economic Management (CIEM), was quoted by news website Saigon Times Online as saying that Vietnam can only reach the current GDP per capita level of Malaysia if its economy maintain an average growth rate of 7 percent per year.

Without major reforms, particularly in budget policies, it will be "extremely challenging" to achieve that growth, he said.

Cung further pointed out that since 2008, Vietnam's GDP per capita has increased by 5 to 6 percent a year.

At a growth rate of 5 percent a year, the country's GDP per capita, which was US$2,052 last year, will not be able to match even the current levels in China and Thailand, he said.

Cung was speaking at a conference on Sunday, where economists discussed the drafting of "Vietnam 2035 Report," a research project conducted by the government and the World Bank.

Economist Nguyen Quang Thai, another contributor to the report, was concerned about Vietnam's ability to become a knowledge-based economy, which requires a high level of skills and education to create economic benefits.

Last year Vietnam scored around 3.5 out of 10 on a knowledge economy index released by the Asian Development Bank, far below the Asia and Pacific average of 4.39. Meanwhile, in the last report released by the World Bank in 2012, it ranked 104 out of 145 economies.

Electronics importers mull price hikes

Importers of electronics products are weighing spiking prices weeks after the devaluation of the Vietnam dong against the US dollar, which is claimed to have pushed up the prices of imports denominated in the dollar.

Pham Ngoc Phi, marketing head of the electronics department at Sharp Vietnam Co. Ltd., said businesses have had to spend more on the same products they imported before but it not easy to increase selling prices on the domestic market. The company is finding ways to deal with the situation.

Tran Tan Hoang Hau, marketing director of Thien Hoa Electronics & Furniture Shopping Center, said suppliers of imported products have not informed the firm of price increases as they can afford the depreciation of the dong.

In August, the State Bank of Vietnam widened the dong/US dollar trading band from 1% to 3% and increased the reference exchange rate by 1% to prop up exports following the strong depreciation of the yuan.

Hau said demand for electronics products has just picked up, so now is not the right time to adjust up prices as retailers may lose customers.

Dang Thanh Phong, who is in charge of communications at The Gioi Di Dong, confirmed the phone retailer has not received any notice on price increases from importers.

Tran Dinh Luu Phong, marketing manager of De Nhat Phan Khang Shopping Center, said suppliers have plans to adjust up prices of new imports by 3-5%, mostly household appliances and technology products. However, importers have not decided when they hike prices.

Phong said retailers have to prepare for price adjustments despite low demand and that the company will ask for suppliers’ financial support to cover costs of marketing and promotional programs.

HCM City cooperative business to launch GrabTaxi-like app

A taxi cooperative in Ho Chi Minh City is bound to launch a cab-hailing app, apparently modeled after the popular GrabTaxi, at the end of this month.

The Life app will allow passengers to hail a taxi within three steps on their smartphone, Duong Tien Thu, director of the 27-7 Taxi Cooperative, said on September 15.

The app is expected to be available for download on September 30, according to its website, lifetaxi.vn.

It appears to only work on Android devices, as there is no iOS icon in the introduction section.

Just as other ride-hailing apps, Life allows users to be fully informed of the fare and estimated time of arrival of their ride, and such information as the driver’s name and car.

The taxi-hailing app Life is seen on two smartphones in this photo provided by the 27-7 Taxi Cooperative.

“A driver will contact the passenger once a booking is confirmed via the app, and payment is made in cash after the ride,” Thu said.

The 27-7 Taxi Cooperative has worked on the Life app in a bid to cut taxi fares and prevent cabs from jostling for passengers, Thu said in a document submitted to the city’s administration and transportation department.

Passengers in Ho Chi Minh City currently have alternative choices for travel besides the traditional taxi.

They can either flag down a cab via GrabTaxi or request a ride using Uber.

Both introduced in Ho Chi Minh City and Hanoi last year, GrabTaxi and Uber were quickly embraced by Vietnamese passengers but they have upset local taxi companies and transportation firms.

The apps offer much cheaper rides to passengers, while sparing them the fear of falling victim to dishonest cabbies.

The 27-7 Taxi Cooperative does not say it wants to rival these foreign players with Life, only asserting that it seeks to “bring customers a trustworthy app to hail a ride easily and enjoy better fares.”

HanesBrands ups investment in Vietnam

Apparel maker Hanesbrands (HBI), a subsidiary of the United States-based Hanesbrands Inc, will raise its investment capital in Vietnam from US$44 million to US$55 million by the end of this year, in order to expand production and provide products to the world market.

The production expansion has again confirmed a strong commitment of Hanesbrands to making Vietnam an important investment destination in its global production map, said a representative of Hanesbrands.

Currently, HanesBrands has three factories in Vietnam, located in Khoai Chau and Kim Dong districts (Hung Yen province) and Phu Bai district (Thua Thien-Hue province).

HanesBrands Vietnam has an annual capacity of 475 million products, accounting for 20% of its total capacity in the globe.

HanesBrands began to invest in Vietnam in 2007. Since then, its famous brand names have been introduced to local consumers such as Hanes, Champion, Playtex, Bali, Maidenform, Flexees, JMS/Just My Size, Wonderbra and Gear for Sports.

HanesBrands Vietnam’s export value has grown well over eight years of operation. The inauguration of its third factory in 2014 helped increase its export value to US$334 million. HanesBrands is forecast to achieve an export value of US$355 million by the end of this year.

Hanesbrands Inc is headquartered in Winston-Salem, New York city. It now has 59,500 employees in 35 countries across the world. In 2014, its revenue was US$5.32 billion, ranking 490th in top 500 largest businesses in the world.

Vietnam to set up export channel to Italy

A Vietnam-Italy Economic Cooperation seminar was held on September 16 in Rome, Italy with the purpose of establishing an export channel in European Union (EU) member states and improving business management of small and medium sized enterprises (SMEs).

Addressing the seminar, Vietnam Chamber of Commerce and Industry (VCCI) Vice Chairman Nguyen Hong Son briefed Italian partners on potential for economic and trade cooperation with Vietnam and hailed cooperation between Italian businesses and the Vietnam Association of Consumer Goods Development (VACOD).

Representatives from associations in Italy appreciated the Vietnamese market’s potential and regarded cooperation with the Vietnamese business community and VACOD members as a top priority in the future.

Both sides also compared notes detailed cooperation steps in the areas of infrastructure, food processing and tourism and pledged to continue carrying outjoint projects effectively.

At the seminar, Commercial Counsellor Bui Vuong Anh informed participants about a plan to host the second meeting of the Vietnam-Italia Joint Committee on Economic Cooperation in Rome in October and the third meeting in Vietnam next year.

Craft villages in the process of international integration

Vietnam has many traditional craft villages which for years, have contributed to the national economy. In the current international integration, Vietnam’s craft village economy is likely to enjoy many development opportunities, but at the same time face numerous challenges.

There are about 2,800 craft villages across Vietnam. Many of them are widely known like Van Phuc silk, Dong Ho folk painting, Bat Trang ceramic, Kim Son sedge mat, Dong Ky wood carving, and Phu Vinh bamboo village.

Craft villages provide employment to 11 million people and turn out roughly 200 kinds of handicraft products. But with international integration, they are facing a mountain of difficulties, particularly in scale of operation developing new designs and products, and obtaining financing.

Tran Manh Cuong, Director of Bac Viet Company in Hanoi’s Bat Trang ceramic village, said 80% of traditional craft villages are operating at the household level, and rely on outdated technology, and as a result, will find it hard to fulfill large orders.

VFF President, Nguyen Thien Nhan, has said at a recent forum on a role of craft villages in the national international integration that Vietnamese craft villages cannot develop without support from the Government and via their own efforts. (Photo: cinet.vn)

Cuong added, “the export of Vietnam’s handicraft and fine arts products will benefit from global integration. But one major challenge for domestic businesses is that they lack practical experience in competition while their regional counterparts have been competing for a long time. That means when countries can freely penetrate each other’s market, they’ll be redoubtable rivals of Vietnamese craft enterprises.”

Artisan Huynh Minh Khoa, the owner of a stone carving facility in Danang City, noted many Vietnamese traditional handicraft items are centuries old but haven’t been recognized as a trademark unique to Vietnamese culture and tradition. Some are of increasingly poor quality and design compared to similar items made in other countries.

Khoa said in order not to fall behind, domestic craft enterprises should offer unique products, adding that they “have increased investment in training skilled craftsmen who can create craft items to develop craft villages in Ngu Hanh Son or Marble Mountain. Danang authorities have gathered craft villages in one place rather than letting scattered stone carving workshops develop.”

By the end of this year, the ASEAN Economic Community will be formed and several trade agreements will likely be signed, leading to many kinds of products having a maximum tariff of 5%. That means Vietnamese products will undergo fiercer competition before craft villages have improved their production technology and professional skills.

At a ceramic factory in Chu Dau Ceramic traditional village in Thai Tan Commune, Nam Sach District, Hai Duong Province. (Photo: cinet.vn)

Cao Si Kiem, Chairman of the Vietnamese Small and Medium-sized Enterprises Association, stressed that in the new context there will be no alternative to cutting costs, creating better designs and patterns, and improving competitiveness in domestic and global markets.

Kiem underlined the need to “revise our laws to encourage Vietnamese people to make products with higher quality, lower prices, and relevance to local and foreign tastes. We also need to invest more in advanced technologies and training of qualified human resources to turn out lots of competitive commodities. Also, enterprises in various fields should work more closely with each other.”

Integration is essential for Vietnamese craft villages to improve their competitiveness and develop sustainably. But to achieve this goal, state agencies should provide craft enterprises more specific information regarding integration while craft villages should proactively update their market knowledge and adjust their production and marketing plans appropriately.  

PwC Vietnam expands HCMC office

PwC Vietnam has expanded its Ho Chi Minh City office to accommodate its business growth and better serve customers.

Its office occupies one more floor at Saigon Tower in Le Duan Street, District 1, from September 14. “The expansion of PwC Vietnam’s Ho Chi Minh City office will better accommodate our staff's work space and provide us with state of the art facilities to host client meetings and other activities,” said Mr. Richard Peters, Chief Operating Officer of PwC Vietnam.

PwC Vietnam’s Ho Chi Minh City office now occupies the second, third, fourth, and eighth floors at Saigon Tower, with its reception area moving to the newly-opened eighth floor office.

The expansion will fully meet the firm’s space needs today and for the next five years, with its workforce expected to grow to 1,000 people in both Hanoi and Ho Chi Minh City to respond to business growth.

PwC Vietnam established offices in Hanoi and Ho Chi Minh City in 1994. It has more than 750 local and expatriate staff with a thorough understanding of Vietnam’s business environment and broad knowledge of policies and procedures covering investment, tax, law, and accounting.

Most transport firms slightly cut freight rates in HCMC

Inspector chief of the Ho Chi Minh City Department of Finance Nguyen Thanh Binh yesterday said that most transport firms have slashed their freight and fare rates by 3-5 percent after a recent inter-departmental inspection.

Seventeen out of 20 taxi companies have submitted their price lists. Of these, three have stopped operation and one does not reduce the fare because the company has not made any increase since early this year.

Forty six out of 51 interprovincial coach operators have lowered their fares with five having shut down.

The inspectorate will continue examining and supervising transport firms over their freight and fare rates. Those not cutting the fare to suit down petrol prices will be handled in accordance with current law.

According to Mr. Binh, transport firms have reduced their charge as low as 3-5 percent because they did increase it lower than petrol price increase level.

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