Thứ Năm, 8 tháng 10, 2015

BUSINESS IN BRIEF 8/10


Prime minister approves airport operator ACV’s equitisation
Prime Minister Nguyen Tan Dung has approved plans to equitise the State-owned airport operator, the Airports Corporation of Vietnam (ACV).
The ACV equitisation will be carried out by selling part of the State stake in the company and issuing shares to raise its charter capital.
Under the equitisation plan, the State will retain a 75% stake in the ACV, while 1.4% will be sold to the corporation’s employees, 0.13% to the union organisation and 20% to strategic investors.
The remaining 3.47% will be put up for public auction at the Ho Chi Minh City Stock Exchange.
The Ministry of Transport will be responsible for managing the State’s stake in the corporation.
The ACV, which consists of nine subsidiaries and affiliates, currently operates 22 civil airports in Vietnam, including eight international and 14 domestic.
The corporation was formed in 2012 by merging three airport operators in northern, central and southern Vietnam, and is currently headquartered in Ho Chi Minh City.
The ACV’s charter capital is over VND22.43 trillion (US$1 billion).
U.S. firms want to become Vietnam’s textile fibre suppliers
Many U.S. fibre firms expressed their desire to become suppliers of Vietnamese garment and textile companies at a meeting in Ho Chi Minh City on Monday.
Surveys by the U.S. Cotton Association show that Vietnam is a very potential market with garment being a country’s key export product, they said.
It is forecast that the industry’s export turnover will strongly increase once free trade agreements take effect.
Still, there have no many fibre plants in Vietnam and local firms have imported most materials, over 80 percent from China and India.
American fibre has good quality and competitive price and Vietnam will be a member of Trans-Pacific Partnership (TPP). Hence, U.S. firms will boost their access to Vietnamese market in the upcoming time which is considered to be their strategy for imminent advantages from the agreement, according to the Cotton Association.
Footwear export turnover on the rise
The Ministry of Industry and Trade has reported that total export turnover of footwear types was estimated to hit US$8.8 billion during the first nine months this year, a year on year increase of 18.4 percent. 
Of these, businesses exported 241.9 million pairs of leather footwear, up 24.1 percent over the same period last year.
According to the Vietnam Leather, Footwear and Handbag Association (Lefaso), many businesses in the industry have got stable export orders thanks to free trade agreements. Some have obtained large orders worth millions of U.S. dollar each to produce until the first quarter next year.
Therefore, the target of U$14-15 billion footwear export turnover this year is likely accessible. Of these, leather footwear will be 280.2 million pairs.
It is expected to increase to US$16-17 billion next year with 314 million pairs of leather types. Localization rate is targeted at 60-65 percent.
Agro-fishery-forestry exports may fail to reach yearly target
Vietnam’s agro-fishery-forestry exports in 2015 may attain 95 percent of the set target, said an official at the Ministry of Agriculture and Rural Development’s regular press conference on October 6 to review the sector’s nine-month results and set forth tasks for this month. 
According to Pham Cong Dung, Head of the ministry’s Department of Salt and Agriculture, Forestry and Fishery Products Processing and Trade, the agricultural sector set a target of 32 billion USD in export turnover this year. 
However, an increase in the price of US dollars, changes in the foreign exchange rates of several strong currencies – particularly Euros – which detrimentally affected export businesses and high inventory of agricultural products of Vietnam’s key importers all posed difficulties for the country’s exports. 
From January-September, the total export turnover of agro-fishery-forestry products was estimated at nearly 21.7 billion USD, down 5 percent from the same period last year. 
In the period, exports of main agricultural products and aquaculture products were valued at 10.3 billion USD and 4.7 billion USD, down 7.2 percent and 17.8 percent, respectively, while the export turnover of wood and forest products reached 5.03 billion USD, a year-on-year rise of 6.6 percent. 
Dung hoped that the completion of negotiations on and the signing of free trade agreements and the Trans-Pacific Partnership would help increase Vietnam’s agro-fishery-forestry exports in the near future. 
To that end, the ministry will also organise more trade promotion activities and continue negotiations towards market openings for several agricultural products, such as dragon fruit to Japan and chicken to Russia.
Jetstar Pacific to open new Hue-Dalat routes in October
Jetstar Pacific Airlines will launch a Hue-Dalat route on October 25, 2015, as heard at a press conference on the service in the central province of Thua Thien-Hue on October 6.
It is the first civil flight offered from Hue to Dalat and vice versa , meeting travel, economic, and tourism demands between the two localities.
Accordingly, the low-cost carrier will operate three return flights a week on Wednesday, Friday and Sunday , using Airbus A320-180 aircraft on the new flights.
Nguyen Dinh Tinh, Jetstar Pacific’s Head of the southern and central regions, said price will start from 550,000 VND (25 USD) for a one-way ticket, excluding taxes and fees and the price is not eligible to be combined with other promotion programmes.
Addressing the event, Vice Chairman of the provincial People’s Committee Nguyen Dung highlighted the significance of the new flight service as stimulating tourism development between the two hubs in the central and Central Highlands regions.
The province also pledged its utmost support to the new service including communications, transport, administration and relic site admission discounts for the company as well as its passengers on the new flights.
RoK considers Vietnam a promising export market
Exports from the Republic of Korea (RoK) to Vietnam, Saudi Arabia and other rapidly-growing nations have enjoyed a double digit growth, according to the Korea Trade-Investment Promotion Agency (KOTRA). 
The agency on October 6 also urged local exporters to more actively target these markets on October 10. 
RoK exports to Vietnam in the first eight months of this year surged 30.2 percent compared to the same period last year. Exports to Saudi Arabia rose 22 percent followed by Morocco at 19.4 percent, the Czech Republic at 16.7 percent and Mexico at 14.1 percent. 
This has been a breakthrough in the field given the RoK’s overall outbound shipments dropped 6.1 percent in the period. 
RoK exporters should make greater inroads into the above countries, all of which have posted robust economic growth, a KOTRA spokesman said. 
RoK manufacturers, which have established plants in Vietnam, Mexico, the Czech Republic and other emerging economies, provide a wide range of industrial spare parts and intermediate goods to their production facilities in these countries. 
This has increased the volume of RoK exports to the countries, KOTRA noted.
Dong Nai: 80 percent of new FDI projects in supporting industry
The supporting industry makes up approximately 80 percent of newly-licensed foreign direct investment (FDI) projects in southern Dong Nai province, mainly producing materials, components and machineries for garment-textile, footwear, electronics and automobile production. 
According to the provincial Department of Planning and Investment, big projects are a 660-million-USD fibre project of Turkey’s Hyosung Istanbul Tekstil Ltd., a 160-million-USD tire factory of Taiwan-based Kenda Group and a 112-million-USD pneumatic control project of Japan-based SMC Manufacturing Vietnam Ltd. 
Most of the supporting industry projects were completed in a rapid manner; several needed only 4-6 months of construction before becoming fully operational. 
The expeditious growth was owed largely to recent free trade agreements which offer reduced tariff barriers. 
The conclusion of the Trans-Pacific Partnership (TPP) deal is forecast to help Dong Nai lure more foreign investors. 
Dozens of enterprises from Japan, Taiwan, the US, Singapore, Thailand and the UAE have visited the locality to learn about its investment policies since early this year.
Vietnam, Indonesia forge stronger economic connections
Indonesian firms are interested in exploring business and investment opportunities in Vietnam as the two countries strengthen their economic partnership, according to Jean Anes, Indonesian Consul General to Ho Chi Minh City
Vietnam and Indonesia have set a target of 10 billion USD in trade by 2018. Both countries are active in efforts to remove tariff barriers to boost trade, service and tourism links, Anes noted at a business connection forum in Ho Chi Minh City
Meanwhile, Farah Ratnadewi Indriani, Deputy Head of the Indonesia Investment Coordinating Board, said that Indonesia is currently improving its investment environment and calling for foreign investors with attractive preferential policies. 
Foreign investors in Indonesia will enjoy tax exemptions for 5-15 years or even 20 years, she said, adding that the country is implementing administrative reforms with one-stop-shop models, reducing the investment licence granting duration to only three days. 
She also revealed that potential sectors awaiting investors include infrastructure building, agriculture, seaport, tourism and mining. 
At the same time, Ho Xuan Lam, Deputy Head of the Ho Chi Minh City Trade and Investment Promotion Centre, said that together with Indonesia and Vietnam’s effort to promote trade liberalisation and economic integration, businesses of both countries are expanding their trade and investment partnerships in various fields. 
In the first nine months of this year, bilateral trade reached nearly 3.5 billion USD, up 6 percent over the same period last year, he noted.
US thread firms eye Vietnamese consumers
US thread-producing companies revealed their intention to enhance their position in Vietnam’s garment-textile market during a meeting with Vietnamese businessmen in the sector in Ho Chi Minh City on October 5. 
A representative from the American Cotton Shippers Association said US firms are making efforts to improve their supply to the Vietnamese market, reported the Sai Gon Giai Phong newspaper. 
The move is part of strategies to tap opportunities ushered in by the Trans Pacific Partnership (TPP) free trade agreement, of which both countries are members. 
As heard during the meeting, garment-textiles is Vietnam’s key export earner, however few domestic plants are turning out threads. The majority of materials are imported, 80 percent of which are from India and China
As such, boasting good quality fibre with competitive prices, US producers are making moves to increase their presence in the Southeast Asian nation. 
Garment-textiles account for 13.6 percent of Vietnam’s overall export turnover and 10.5 percent of gross domestic product (GDP). 
Currently, 6,000 facilities are producing apparel across the nation, creating jobs for about 2.5 million workers or 25 percent of the Vietnamese industrial workforce.
Lending picks up, HSBC says
Lending by banks has been accelerating, growing at 18.2 percent in the year-to-date compared to the same period last year, according to HSBC's monthly report Vietnam at a Glance released on October 2.
The pick-up in lending is partly reflective of the central bank's efforts to free up liquidity – in July it lifted the 2015 credit growth ceiling for several major banks. The State Bank of Vietnam has said credit growth could surpass the 13-15 percent annual target set early this year and top 16.5 percent.
Growth had been 14.2 per cent last year.
The stronger than expected GDP growth in the third quarter, coupled with the nascent pick-up in bank lending and domestic demand, has prompted HSBC to raise its 2015 GDP forecast to 6.6 percent from the earlier 6.3 per cent.
It also raised its 2016 GDP forecast to 6.7 from 6.5 percent.
The report said price pressures remain subdued for now despite the acceleration in growth. In fact, headline inflation slowed to zero percent in September from 0.6 percent in August.
A 13.1 percent year-on-year fall in the transportation component shaved 1.1 percentage point off headline CPI growth. But core inflation too remains subdued, slowing to 1.6 percent y-o-y in September from 2.4 percent previously. Food inflation has also continued to drift lower, falling 0.3 ppts to 0.7 percent y-o-y.
With oil prices expected to stay subdued and the dong unlikely to be devalued further, near-term price pressures remain weak, allowing the SBV to keep the OMO (open market operations) rate steady at 5 percent.
However, the central bank will want to remain vigilant: with strong growth likely to continue in the quarters ahead, the report sees inflation bottoming out in the fourth quarter and then rebounding to 3.3 percent y-o-y by the end of 2016's first half. The figure may rise to 5.2 percent y-o-y by next year end.
Another reason that the next move from the central bank will likely be a hike, and not a cut, is the trade deficit. The combination of slowing exports and recovering domestic demand has meant that Vietnam's trade balance has fallen back into deficit.
Though not yet alarming, what is worrying is that the deterioration has been driven by a widening deficit in the domestic sector. As opposed to foreign-invested firms, whose imports are used as inputs for Vietnamese shipments abroad, domestic firms primarily import to serve domestic consumption.
In the past the trade deficit of domestic firms, especially the State-owned enterprises, has widened on the back of credit-fuelled consumption and investment, putting pressure on the currency and posing challenges to the economy.
But for now Vietnam's macro risks are limited, given the central bank's prudent management of monetary policy.
Tuna exports to Canada rise 60 percent
Tuna export value to Canada reached 1.4 million USD in August, up 61 percent compared to the same period last year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). 
However, shipments to this market this year fluctuated greatly, with drops recorded in previous months, resulting in a 27.6 percent year-on-year decrease for the January-August period to 6.1 million USD. 
Canada imports mainly fresh, frozen, and dried tuna from Vietnam
At the same time, VASEP noted that tuna exports to Canada are on the rise over the past five years while shipments to other overseas markets fell. 
Vietnamese tuna products are exported to 100 countries and territories, including the US, Japan, Israel and Canada, as well as the EU and the ASEAN region.
From the first day to August 15, the tuna export value to the EU and Japan, two key export markets of local tuna products, fell by 23 percent to 65.4 million USD and by 23.8 percent to 12.8 million USD, respectively, against the same period last year.
Meanwhile, the nation gained year-on-year growth of 13.8 percent in tuna export value to reach 120 million USD for exports to the US and 8.8 percent to reach 21.6 million USD for exports to the ASEAN region.
US dollar rates steady following central bank’s Circular 15
The exchange rates between Vietnam dong and US dollar saw a slight change at domestic commercial banks on October 5 following Circular 15 issued by the State Bank of Vietnam (SBV) taking effect. 
The Circular No. 15/2015/TT-NHNN on foreign currency transactions by credit institutions was issued on October 2 and took effect on October 5 to curb speculation and hoarding of US dollars by enterprises. 
The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) kept the buying and selling rate of the US dollar on October 5 unchanged from the previous week, listing at 22,445 VND and 22,505 VND per dollar, respectively. 
Meanwhile, at the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), the buying rate raised five VND to 22,445 VND per dollar and the selling rate was cut by five VND to 22,505 VND per dollar. 
The Bank for Investment and Development of Vietnam (BIDV) quoted its buying rate at 22,440 VND per dollar and the selling rate at 22,510 VND per dollar, both up 5 VND. 
On the same day, the gold price at the Saigon Jewellery Company (SJC) was listed below 34 milion VND (1.510 USD) for one tael, with buying and selling prices pegged at 33.71- 33.93 million VND (1,497-1,507 USD). 
Circular 15 states that foreign currency transactions with banks must be accompanied by documents proving the purpose, amount and duration of payments. 
If customers need to settle with partners within two working days, banks can sell foreign currencies immediately. 
When the payment term is more than three days, banks are only allowed to sell forward exchange, with the maximum term of 365 days. 
The circular was the second step taken by the central bank in the past few weeks to contain the dollarisation of the domestic economy.
Early last week, the central bank issued a decision to cut the interest rate ceiling on dollar deposits offered by commercial banks to organizations and companies from 0.25 percent to zeo percent per year, while the rate for individuals was reduced from 0.75 percent to 0.25 percent per year.
Vietnam seeks to boost agricultural exports to Singapore
The Prime Minister has instructed measures to foster exports of Vietnamese farm produce, aquatic products and other food to the Singaporean market.
Accordingly, the Ministry of Agriculture and Rural Development was requested to conduct negotiations for the signing of agreements on mutually recognition in the fields of agricultural and aquatic products while working with Singapore’s Agri-food and Veterinary Authority (AVA) to enhance cooperation and exchange.
The Ministry of Industry and Trade was asked to build trade promotional programmes for Vietnamese agricultural products in Singapore and work to connect Vietnamese exporters with Singaporean importers.
During the past three years, two-way trade between Vietnam and Singapore has grown at an annual speed of 12 percent. Last year, Vietnam raked in 2.93 billion USD from exports to Singapore, a year-on-year increase of 10.4 percent. 
Most of Vietnamese agricultural exports to the Singaporean market, which has to import 90 percent of its food, are pepper, sea food, rice, vegetable, coffee, cashew nut and rubber. Vietnamese export revenues of those commodities increased 1.3-fold from 274.6 million USD in 2012 to 355.8 million USD in 2014.
Dak Lak: Investment falls in first nine months
The Central Highlands province of Dak Lak saw a noticeable fall in investments during the first nine months of the year, reeling in just 2.1 trillion VND (93.4 million USD) or only 75 percent of last year’s figure. 
Chief among the 26 newly-registered projects are dairy cattle farms worth 1.2 trillion VND (54 million USD) run by Duc Long Gia Lai Group in Ea Kar district. 
According to the provincial People’s Committee, the contraction was due largely to inadequate attention of authorities at communal and district levels to invite investment. 
Poor planning work and a lack of information on local development plans, coupled with slow land clearance have discouraged potential investors. 
To resolve the problem, the People’s Committee requested local authorities publicise project portfolios waiting for investments more widely and speed up site clearance efforts. 
It also urged more convenient investment certificate granting procedures in accordance with regulations and transparency standards and asked relevant provincial agencies to provide support to investors in need.
Cement consumption up year-on-year
The total consumption of cement till September 2015 rose 3 per cent against the same period of last year to 52.11 million tonnes, according to the Ministry of Construction.
The ministry's Building Material Department said that of these, 40.26 million tonnes of cement were sold on the domestic market, a year-on-year surge of 8 per cent while the export volume of cement reached 11.85 million tonnes, a 12 per cent lower than the same period of last year.
However, total consumption of cement in September was down 9 per cent to 5.37 million tonnes, including 4.27 million tonnes for the domestic market, 11 per cent lower than last month, chinhphu.vn reported.
Experts in building materials said the reduction in total consumption volume of cement in September was due to the impact of the rains and the "ghost month" when people often avoid starting construction projects.
They expect cement consumption on the domestic market to be better by the year-end when the construction season begins.
However, the cement industry would find it difficult to export cement by the year-end because some cement exporters in the region would increase their volumes to between 5 and 6 million tonnes.
Le Van Toi, head of the Building Material Department said the enterprises should promote domestic consumption of cement and then improve competitive ability of cement products for exports.
Nguyen Quang Cung, chairman of the Viet Nam Cement Association, said cement factories located near seaports with high capacity and high technology accorded priority to exports, the Cong thuong newspaper reported.
Tran Thanh Hai, deputy head of the Import Export Department under the Ministry of Industry and Trade, said the department would co-operate closely with the building material department to maintain a balance between supply and demand, and assess the ability of cement enterprises when joining the world market to ensure reasonable solutions in production and business for local cement enterprises. 
VN seeks more open process for state contracts
Viet Nam has implemented an open contracting initiative as part of a drive to improve transparency in procurement activities, particularly in public investment projects.
This was also aimed at boosting the participation of the public in supervising contracts to improve the efficiency of State capital, said Deputy Minister of Planning and Investment Dao Quang Thu at a ceremony held in Ha Noi on October 6.
Open contracting refers to norms and practices for increased disclosure and participation in public contracts at all stages of the contracting process and all types of contracts, said World Bank specialist Lindsey Marchessault.
Open contracting encompasses all public contracts, including contracts funded by combinations of public, private and donor sources.
The stages include planning (information about the planning of a contract), formation (information about the tendering or negotiation process), award (information about the awarded contract), implementation (information about implementation process, including payments) and termination (implementation of ending a contract), she said.
"Publication of open contracting data could help achieve the following objectives: achieving value for money in procurement, detecting fraud and corruption such as patterns of overpricing and collusive bidding, and competing for public contracts and monitoring service delivery," Lindsey added.
World Bank Country Director for Viet Nam Victoria Kwakwa said contracts were the bricks and mortar of public benefit, where taxpayers' money got converted into tangible products that citizens care about such as schools, roads and hospitals.
The Government of Viet Nam has recognised that it was critical that public contracts should be fairly awarded and offer good value-for-money, she said, adding that when the government and businesses meet, rules need to be clear and deals open to the public.
The 2013 Procurement Law embodied many of these values and the next step would be to harness modern technology, electronic procurement and contract management systems, to implement these values for economic transformation, she said.
Openness pays huge returns on investment. South Korea's transparent e-procurement system KONEPS saved the public sector US$1.4 billion in costs. Time taken to process bids dropped from 30 hours to just two. Perhaps most significantly, it also saved businesses an estimated $6.6 billion, she said.
Open contracting was about openness and engagement. Through increased access to open data on public contracting and the use of this data by stakeholders, governments could achieve greater value for money, the private sector could gain access to more competitive opportunities, and civil society could ensure that public money was being spent effectively and reaching its results, she said.
The Ministry of Planning and Investment, which co-hosted the workshop with the WB, will pioneer in implementing the open contracting initiative in Viet Nam.
The ministry last month issued a decision to publicise bidding and purchasing contracts within the ministry as first steps to implement this initiative.
Under Viet Nam's action plan until 2017 with a vision towards 2025, the country would review and upgrade the existing e-Government procurement system to be compatible with the standard formats of open contracting data, develop monitoring and evaluation policy (set of criteria, information collection and processing and promulgate decisions or circulars on information and open contracting, said the head of the ministry's Procurement Division, Tran Dang Quang.
By 2025, the country is expected to professionalise procurement operations for individuals and organizations directly involved in procurement works, while stakeholders and citizens can access and use information available in the system for monitoring and evaluation and reflect on the bidder selection and contract implementation.
The open contracting initiative is widely applied by many countries in the world, including the US, the UK, South Korea, Ukraine and Hungary
Wood fair focuses on competitiveness
Discussions during the four-day bi-annual Vietnam International Woodworking Industry Fair in mid-October are expected to help producers improve competitiveness when the Trans-Pacific Partnership (TPP) and other free trade agreements come into effect.
Tran Le Huy, secretary general of the Forest Products Association of Binh Dinh, said at a press briefing yesterday that producers would find advanced machinery and technologies at the expo that would help address the country's low productivity.
"Cooperation with the Vietnam Chamber of Commerce and Industry and ILO (International Labour Organisation) for human resource training has been of help," Huy said.
The seminar during the fair, which will be held Oct. 14-17, will include discussions on production management and productivity by experts and leading companies.
The TPP poses challenges in higher standards for labour (including wage, overtime work) and environment, among others. This will push up production costs, Huy said.
Nguyen Chanh Phuong, secretary general of the Handicraft and Wood industry Association of HCM City, said last year Viet Nam's exports of furniture and other wood products totalled US$6.3 billion. It is expected to rise to $7.5 billion this year.
Around 280 companies from 21 countries and territories including Taiwan, China, Viet Nam, India, Spain, Germany and Thailand will introduce 1,200 machines and industrial products and services at the exhibition's 500 stalls.
The event will be held by Vinexad in coordination with Taiwan' Chan Chao International Company at the Saigon Exhibition and Convention Center, Nguyen Van Linh Avenue in District 7. 
S Korean companies aid VN development
As leaders of foreign investment in Viet Nam, most Korean investors consider themselves to be local businesses contributing to the country's development, according to opinions shared at a conference in Ha Noi yesterday.
The conference, the first of its kind on Korean corporate social responsibility (CSR), was organised by the South Korean Embassy, Korean Chamber of Commerce and Industry, Korea Trade-Investment Promotion Agency and the Ministry of Planning and Investment. 
The commitment of Korean businesses to contribute to Viet Nam's sustainable economic development is seen in the large number of CSR initiatives launched by corporations such as Asiana Airlines, CJ Group, Daum Kakao Corporation, Lock & Lock Vina, Nonghyup Bank and Samsung Electronics.
The CSR programmes covered healthcare, culture, education and the environment as well as the reduction of poverty and the development of rural areas in the country.
Besides launching scholarships and opening schools and libraries, Korean companies have also taken part in local blood donation drives and environmental protection activities. Two Korean banks also supported Vietnamese brides, who were returning to visit their families.
Deputy Minister of Planning and Investment Nguyen Van Trung expressed appreciation for the Korean CSR programmes, considering them meaningful for the sustainable development of the country, especially in the context of South Korea being Viet Nam's largest investor in terms of investment volume and number of projects.
South Korean ambassador Jun Dae Joo said, as of this August, the cumulative investment of South Korea in Viet Nam had reached US$43 billion. He believes that when the Vietnam Korean Free Trade Agreement goes into effect this year, the targeted bilateral trade of $70 billion by 2020 between the two countries will become achievable.
HCMC office market stable in Q3
In the third quarter there was no new supply in either Grade A or Grade B office space in Ho Chi Minh City, according to CBRE’s quarterly report, which allowed the market to gradually absorb remaining space. The occupancy rate increased in new buildings while remaining stable in mature, old buildings.
One quarter has now passed since the implementation of the revised Law on Real Estate Business and foreign companies are seeking large spaces for long-term lease and sub-lease. A number of successful deals were recorded in the quarter, according to Ms. Dung Duong, Director of CBRE Vietnam’s Research and Consulting. “Foreign companies are also looking for buildings to acquire for their own use,” she added.
The Ho Chi Minh City office market did not witness any significant change in either the CBD or decentralized districts in the quarter.
There was a slow improvement in both asking rents and the vacancy rate in Grade A and Grade B. As there is limited supply in the market and continuous demand, Grade A and Grade B buildings in the quarter still recorded stable rents compared to the previous quarter.
Compared to the previous quarter, the Grade A vacancy rate decreased by 2.9 percentage points due to good leasing activities in the newly-opened Vietcombank Tower. The Grade B vacancy rate increased by 0.5 percentage points as tenants moved out to upgrade their offices.
Grade A recorded high net absorption, at 8,599 sq m NLA (net lettable area). This was lower compared to the second quarter but much higher than in the same period last year thanks to the high net absorption at Vietcombank Tower.
Grade B recorded a fall in net absorption as tenants moved out to better quality buildings with larger spaces. Net absorption in Grade B decreased by 112 per cent quarter-on-quarter and 182 per cent year-on-year.
Based on enquiries to CBRE, the top four most active sectors so far this year are IT/Electronics, Trading, Finance/Banking, and Logistics. Most renewals and expansion enquiries to CBRE came from tenants in the CBD area, while relocation enquiries mainly came from companies in non-CBD areas.
Regarding future supply, the next wave of office supply in Ho Chi Minh City will mainly focus on Grade A in the CBD area and is typically of a much higher quality with larger floor plates (varying from 1,500 sq m to 2,500 sq m) and includes mixed-use projects. This new supply is expected to come online between 2017 and 2020.
Slight slip in Global Dynamism Index
The Grant Thornton Global Dynamism Index (GDI) 2015 reported that the Asia-Pacific region scores well in terms of business operating environment, financing environment, labor market and technology, although it lags behind in market growth. Dynamism refers to the changes in an economy that are likely to lead to a fast future rate of growth. The GDI - which combines 22 indicators across five growth areas to identify the best business growth environments in the world - identifies Singapore as the most dynamic market globally.
Though some Asia-Pacific peers rank in the Top 30, some have slipped in the rankings, such as Malaysia (from 13 to 16) and Australia (from 1 to 3) and Vietnam to 28 (down one place).
“Advanced Asia-Pacific economies offer a good blend of sound growth fundamentals, alongside a productive labor force and a culture of investment in R&D,” said Mr. Kenneth Atkinson, Executive Chairman of Grant Thornton Vietnam.
“Market entry decisions are some of the toughest a business leader ever has to face. There are so many factors - both known and unknown - to consider. Uncertainty about what lies ahead can make it hard to make the case for action to colleagues and funding partners and to manage risk effectively,” he said.
If considering the financing environment - which includes the financial regulatory system, access to capital, inward M&A deals, private sector indebtedness, inward direct investment, and corporate tax burden - Vietnam ranks 29th globally, a fall of three positions, according to the GDI. Malaysia slid from the 16th to 27th and Australia from 11th to 16th. Japan, at 36th, is the lowest ranking economy in the region and is in the bottom five in financing environment and market growth. On the other hand, Singapore ranks first globally and no lower than 25th in any growth area, highlighting its robust, broad-based offer to dynamic businesses.
The overview improves significantly for Vietnam when referring to labor and human capital, which analyses labor productivity growth, unemployment, time spent in education, and population, and where Vietnam ranks seventh in the global rankings and fifth in Asia-Pacific.
Lastly, Asia-Pacific countries rank surprisingly high in economics and growth, which includes real GDP growth, private consumption growth, and stock market growth, holding Top 10 positions in the global rankings. Malaysia ranks third, Vietnam rose to fifth, the Philippines was sixth, and Indonesia eighth.
“The GDI cannot replace engaging with an advisor with a deep understanding of international expansion and the countries being considered,” said Mr. Nguyen Chi Trung, Managing Partner of Grant Thornton Vietnam.
“But it can be used as a tool to help identify countries of interest by drawing on 22 indicators that have each been assigned an importance through a survey of business leaders, adding that vital human perspective,” he said.
RMIT links up with leading ERP company
RMIT University Vietnam and Acumatica, the fastest-growing cloud ERP (enterprise resource planning) company in the world, signed a Memorandum of Understanding (MoU) yesterday to develop the next generation of graduates who will lead Vietnam’s future business and management needs.
“RMIT Vietnam is focused on grooming highly employable graduates who have practical industry skills and the ability to think critically and creatively,” said the Head of the Centre of Commerce and Management at RMIT Vietnam, Professor Raymond Gordon.
“We collaborate with the most progressive international companies today to groom the brightest young talent in Vietnam who can help businesses leverage technology for long-term growth,” he said.
This first collaboration between RMIT Vietnam and Acumatica will see knowledge-sharing between Acumatica’s technology experts and the University’s students, lecturers and researchers. Students will also benefit from hands-on use of Acumatica’s cloud ERP software, which is currently used by customers in 30 countries worldwide to manage their operations and drive profitability.
“We believe that this will create demand for the next generation of IT, finance, and business management talent - a group of specialists who operate at the intersection of business and technology,” said Mr. Laurent Dedenis, President of International Operations at Acumatica. “At Acumatica we hope to nurture these specialists through this unique collaboration with RMIT Vietnam.”
Both RMIT Vietnam and Acumatica will also work jointly on developing collaborative research and academic materials to increase students’ exposure to the technology needs in real-life business environments.
Expected to span five years, the collaboration will be managed jointly by RMIT Vietnam’s Centre of Commerce and Management and Acumatica. The University expects that close to 3,000 commerce, business, and IT undergraduates stand to benefit from the collaboration.
RMIT University Vietnam is the Asian campus of the Melbourne-based RMIT University. With two campuses in Hanoi and Ho Chi Minh City it offers programs in the business, technology, and creative areas and boasts an impressive range of extra-curricular activities that encourage students to break new ground in their areas of interest.
Acumatica is a leading provider of cloud business management software that empowers small and medium-sized enterprises to unlock their potential and drive growth. Built on the world’s best cloud and mobile technology and a unique customer-centric licensing model, Acumatica delivers a suite of fully integrated business management applications, such as Financials, Distribution, CRM, and Project Accounting, on a robust and flexible platform. In an interconnected world, Acumatica enables customers to take full control of their businesses, play to their organizations’ unique strengths, and support their clients by following them anywhere on any device.
German enterprises seeking trade cooperation
Ten German enterprises will visit Vietnam from October 12 to 16 to seek trade opportunities, according to German Industry and Commerce in Vietnam (GIC/AHK). The Head of the delegation of German enterprises is Director Marketing & Communication and Director Eastern Germany at Germany Trade & Invest (GTAI), Mr. Peter Alltschekow.
They seek cooperation in architecture, building clean water plants, building and exterior materials, pre-cast concrete, prefabricated housing, portable instrument production, tool manufacturing,  machinery, ophthalmology equipment, chemicals used in the tanning industry, and potato growing.
Some are among the largest enterprises in Germany, including Norex Norika, which is looking for partners in agricultural technology, B.T.innovation GmbH, which is seeking cooperation in concrete production, and others such as Selectrona GmbH, WMB Werkzeugmaschinenbau Halle GmbH, and Koenig Design.
Two business conferences will be held to bolster trade cooperation between the two countries, in Hanoi at the Sofitel Plaza Hanoi on October 13 and in Ho Chi Minh City at the Pullman Saigon Centre on October 15.
Germany is now a strategic partner of Vietnam in the EU. Bilateral trade in 2014 was around $8.9 billion. In the last five years annual trade growth has been from 15-20 per cent. The main goods exported from Vietnam to Germany are telephones (26 per cent), textiles (14 per cent), footwear (11 per cent), and coffee (9 per cent).
Control relaxed at SBV-acquired banks
The State Bank of Vietnam (SBV) has loosened its control over the three banks it recently took over (VNCB, GPBank, and OceanBank) as they have seen positive changes in their activities. In particular, none have had to borrow special capital to cover deposits.
"They all have excess liquidity - VND7 trillion ($311.78 million) at OceanBank, VND3 trillion ($133.62 million) at GPBank, and VND1 trillion ($44.54 billion) at VNCB," Mr. Nguyen Huu Nghia, Chief Inspector at the SBV, told local media. This is also one of the main factors in the SBV loosening its control. It has also allowed credit growth to return to secure lending areas.
He said that bad debts and unprofitable assets have been initially addressed and recovered. New deposits have increased, large cash withdrawals by customers have ceased, and governance has been strengthened.
There is still some direct involvement in their governance and management, with support from Vietcombank and VietinBank, and the SBV is maintaining its strict supervision.
The SBV bought the three banks at a price of VND0 per share, as their equity was in negative territory and they could not resolve their problems on their own.
Fiber firms to benefit from more foreign yarn projects
More foreign direct investment (FDI) companies are involved in textile-dyeing projects in Vietnam to tap opportunities from the Trans-Pacific Partnership (TPP), thus benefiting fiber producers.
Speaking at a listing ceremony of Century Synthetic Fiber Corporation last week, Pham Hong Giang, general secretary of the Vietnam Cotton and Spinning Association, said new FDI inflows in textile and dyeing projects would benefit producers of polyester filament in Vietnam as fiber demand is forecast to surge.
According to Giang, more polyester filament has been used as this kind of fiber is suitable for new apparel production technology. Currently, there are five producers of polyester filament in Vietnam, namely Formosa, Century Synthetic Fiber, Hualon, Dong Tien Hung and PVTex with a combined capacity of around 210,000 tons of fiber.
Giang said Vietnam now turns out more than 800,000 tons of cotton fiber, with around 600,000 tons for export and the remainder for domestic consumption.
The U.S. imposes an average tax rate of 17.5% on apparel imported from Vietnam, with products made of polyester filament subject to a duty of up to 32%. If the TPP takes effect, the tax on Vietnamese garments will be brought down to 0% shortly, helping increase the competitiveness of polyester filament products.
Dang Trieu Hoa, chairman and general director of Century Synthetic Fiber Corporation, told the Daily that in the past weeks his company has met representatives of around 20 companies with plans to invest in textile and dyeing projects in Vietnam. Those customers are from China, Taiwan and South Korea, and some of them have invested in projects in Long An and Binh Duong provinces.
Only apparel products made of fiber produced in the 12 TPP member states including Vietnam will enjoy tax incentives.
Under the free trade agreement between Vietnam and the European Union (EU) expected to take effect in 2017, made-in-Vietnam garments whose cloth is made in the EU, Vietnam or South Korea will enjoy tax incentives when exported to the EU.
Malaysia slaps dumping duties on Vietnam steel coils
Malaysia has temporarily imposed dumping tariffs on pre-painted and color-coated steel coils imported from Vietnam and China, said the Vietnam Competition Authority under the Ministry of Industry and Trade.
Temporary duties on color-coated steel products from Vietnam are set at 5.68%-16.45% from September 26 to January 23 next year, according to the preliminary results of a dumping investigation announced by the Malaysia Ministry of Industry and International Trade (MITI) late last month.
The duties are much lower than 52.1% imposed on the same products imported into Malaysia from mainland China during this period because Chinese exporters did not cooperate with Malaysia in the investigation.
Malaysia launched the dumping probe on April 28 after local firm FIW Steel Sdn. Bhd filed a lawsuit against imported color-coated steel coils.
As the duties are applied temporarily, the Vietnam Competition Authority cited MITI as saying that the concerned parties could submit their complaints and evidence to Malaysia before October 14 to protect their rights and interests.
Malaysia will make a final decision on dumping margins based on available evidence if its investigation agency has not received any new evidence when the deadline is due.
Fourteen provinces attract no fresh FDI in Jan-Sept
Fourteen provinces got no new foreign direct investment (FDI) projects in the first nine months of this year while ten others reported meager FDI approvals, according to the Foreign Investment Agency (FIA). 
Tuyen Quang, Dien Bien and Lao Cai provinces in the north, and Bac Lieu and Dong Thap provinces in the Mekong Delta were among the provinces without new FDI approvals from January to September.
Figures of the FIA under the Ministry of Planning and Investment showed that of 49 provinces with new FDI projects in the period, seven had only one project each, four with two projects each and three with three projects each.  
The FIA noted a number of projects with pledged capital of less than US$1 million or US$10,000-30,000 each were approved in Yen Bai, Son La, Binh Thuan and Bac Kan provinces.
Despite small-scale FDI projects in many localities, FDI approvals reached US$17.15 billion in January-September, up a staggering 53.4% year-on-year.
Bac Ninh took the lead with US$3.34 billion registered for both fresh and operational FDI projects in the period, making up 20.1% of the country’s total FDI approvals.
HCMC came second with total FDI pledges of US$2.61 billion (15.2%), followed by the Mekong Delta province of Tra Vinh with US$2.52 billion (14.7%).
In terms of region, the southeast was the leader with US$6.4 billion pledged for new and existing projects, or 37.3% of the total, followed by the Red River Delta region with US$6.05 billion (35.3%).
The Central Highlands region accounted for the smallest proportion, a mere 0.2%, with total FDI pledges of US$38.1 million approved in the year to September.           
Foreign enterprises registered to invest in 17 sectors in the period. Of which, the manufacturing-processing sector made up 66.3% of total pledged FDI capital, equivalent to US$11.36 billion for 737 fresh projects and 346 operational projects.
The electricity generation and distribution sector came second with FDI approvals totaling US$2.6 billion (15.3%) at five new and three operational projects. The real estate sector was third as US$1.81 billion was pledged for 19 new and seven existing projects.
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR

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