BUSINESS IN BRIEF 6/11 Textile, garment stocks to get boost from FTAs Vietnamese textile and garment stocks may receive a boost after Vietnam completes free trade agreements with other countries and organisations, experts said at a recent meeting.  Dang Tran Hai Dang, deputy head of Vietinbank Securities Corporation's Market Analysis, said that textile-garment stocks were among the strongest gainers in the last 12 months with an increase of 27 percent in value, behind only construction material producers. He said that most local producers have fulfilled their production capacity until the end of this year and lower input costs had helped them increase profit margins. He said that the growth potential for textile-garment stocks is due to many positive factors that can boost the local market such as the price-to-earning (P/E) ratio now is 12, proving that the country has a lot of investment opportunities compared to other markets such as Malaysia with P/E of 17.31 and Thailand with P/E of 16.53. Vu Duc Giang, president of the Vietnam Textile and Apparel Association (VITAS) said that the textile and garment industry will be among three industries receiving the most benefits from the free trade agreements (FTAs) that the country has or is now finalising, including the Trans-Pacific Partnership. He said that Vietnamese textile-garment producers are now expanding production all around country and some of them, such as Viet Tien Garment JSC and Garment 10 Corporation are completing procedures to be listed on the stock market in the near future. At the moment, some of textile-garment producers are already listed on the stock market, such as Binh Thanh Import-Export Production & Trade JSC (GIL), Everpia JSC (EVE) and Thanh Cong Textile Garment Investment Trading JSC (TCM). The industry has recorded a good annual growth rate of 17-18 percent since Vietnam joined the World Trade Organisation (WTO) in late 2006. Last year, the textile-garment industry exported 24.7 billion USD, equal to 16 percent of the country's total export value, and Vietnam was among the top six textile-garment exporters in the world with China, EU, Turkey, Bangladesh and India. This year, VITAS targets a maximum export value of 28 billion USD. Since the TPP talks reached final agreement in early October, Giang said that the TPP and other FTAs are expected to help boost the foreign direct investment (FDI) in the industry when they take effect. FDI will provide huge additional capital for local companies, especially material producers as VITAS is trying to raise the percentage of local-made materials in textile-garment industry from the current 50 percent to 70 percent in the next three years, he said. In addition, Vietnamese companies will have many chances to learn from foreign business models and receive investment from them through buying shares and increasing foreign ownership in local companies, he said. However, the local textile-garment industry will face some challenges from international partnerships, he said, adding that the industry lacks a long-term development strategy for the next 30-40 years and the quality of human resources is insufficient to meet the industry's demand for managing the production chain. The country must be aware of environmental issues related to textile-garment factories – which are often built in coastal areas and the Government should reconsider the monetary policy that may make Vietnamese companies less competitive in both domestic and global markets, he added. Banking restructuring ramps up activities The banking system is racing against time as its major restructuring enters its last phase.  It devised a roadmap to restructure credit organisations at the end of 2011, and began implementing the regulations in February 2012. These were the earliest projects under the national economic overhaul.  Following the blueprint, the system has yielded positive outcomes, but the overall pace remains slow and requires drastic moves to meet the deadline.  Earlier this year, State Bank of Vietnam (SBV) Governor Nguyen Van Binh said several merger and acquisition (M&A) deals would take place, including some between healthy banks in order to expand their scale and boost their performance.  In 2015, up to eight banks are expected to join the restructuring process, added Binh.  Consequently, the SBV has taken over all shares in three cash-strapped commercial banks – the Ocean Bank, Vietnam Construction Bank (VNCB) and GPBank – for zero Vietnam dong each. The move was designed to ensure the legal rights and interests of existing depositors.  Excluded from these extensive changes, banks that have performed well are increasing their chartered capital to secure their finances.  The Military Bank boosted chartered capital to 16 trillion VND (717.1 million USD), while SHB and VPBank added approximately 1.6 trillion VND (71.7 million USD) and 1.1 trillion VND (49.3 million USD), respectively.  Mergers between VietinBank and PGBank, as well as BDIV and MHB, resulted in new highs of chartered capital – 40.2 trillion VND (1.8 billion USD) and 31.48 trillion VND (1.41 billion USD), respectively.  Bank for Investment and Development of Vietnam (BIDV) Deputy Director Tran Phuong said the restructuring has been going well thus far. The market is becoming stable and interest rates are decreasing.  Most reform measures have been carried out on a voluntary basis without any State interventions, Phuong said.  He considered this a positive sign. Roughly a year ago, State orders would be necessary to solve these types of problems and would take a long time to assess. Now the parties involved work together without Government input. Exchange rate volatility drives down third quarter earnings Vietnam's foreign exchange rates fluctuated greatly in the third quarter, influenced by global currency volatility resulting in a negative impact on earnings of many listed companies.  According to data available on the financial website ndh.vn, the US dollar increased 3.1 percent against the Vietnamese dong in the third quarter while prices of the Japanese yen and euro went up 5.1 percent and 3.9 percent, respectively, during the period. Around 385 companies have published the third-quarter earnings reports on the two stock exchanges as of October 28, accounting for 56 percent of total listed companies. Many posted lower profits due to forex losses. "Foreign exchange rates were very volatile in the third quarter which adversely affected business results of many companies, particularly the ones which borrowed heavily in foreign currencies, or their businesses rely on imports," Thanh Thuy, a stock analyst was quoted on the ndh.vn. With a majority of loans in the greenback, Century Synthetic Fiber Corporation (STK) saw their July-September financial expense rise almost ten times against the same quarter of last year to 21 billion VND (937,500 USD), thus trimming its profit to just 7 billion VND (312,500 USD), down 76 percent year-on-year. Its nine-month profit reached nearly 62 billion VND (2.8 million USD), equivalent to just 41.4 percent of the company's yearly target. Petroleum, transportation and rubber companies were also among the biggest losers. Vietnam Tanker Co (VTO) incurred a forex loss of 24 billion VND (1.1 million USD) in the third quarter, pushing its financial expense up 400 percent compared year-on-year to 38.6 billion VND (1.7 million USD) while driving its profit down 82.3 percent to 3.3 billion VND (147,300 USD). As of September 30, VTO incurred a US dollar-denominated debt of 856 billion VND (38.2 million USD) while its loans in Singaporean dollars was 40.5 billion VND (2.5 million USD). Vietnam Petroleum Transport Co (VIP) and Vinaship (VNA) were doubly hit by both forex fluctuations and poor business performance. VIP earned 1.4 billion VND (62,600 USD) in net profit in the last three months, significantly down from a 16.5 billion USD (737,000 USD) profit in the third quarter of last year. Meanwhile, VNA incurred a loss of 20 billion VND (893,000 USD) during the period and adjusted its plan from a profit of 2 billion VND (89,300 USD) to a loss of 60 billion VND (2.7 million USD) by year-end. VNA posted a cumulative loss of 38 billion VND (1.7 million USD) in the previous two quarters. Financial expense of the Southern Rubber Industry Co (CSM), one of the biggest listed rubber companies with a market cap of over 2 trillion VND (89.3 million USD), also increased by 62 percent against the same period of last year due to forex volatility. Its net profit thus was down 32.6 percent year-on-year to 53 billion VND (2.4 million USD). Apart from borrowing heavily in foreign currency, the tyre manufacturer's business depends on imported raw material which accounts for 65 percent of its total material input. Also seeing rises in financial expenses due to forex fluctuations were Dry Cell and Storage Battery Co (PAC) and Ha Tien 1 Cement Co (HT1), which posted impressive earnings with net profits rising 16 percent and 77 percent year-on-year, respectively. However, VicemBut Son Cement Co (BTS) incurred a loss of 24.5 billion VND (1.1 million USD) in the period. Almost 300 companies have yet to report their financial statements, including large ones which attributed their delays in preparing lengthy consolidated financial reports. The number of companies which will likely suffer from forex fluctuations is expected to rise as many are borrowing in foreign currencies, particularly in the US dollar and euro. Industrial production sees strong recovery Vietnam’s industrial production growth has showed good signs of recovery so far this year with October’s index rising nearly 3.4 percent over the previous month and 8.8 percent year-on-year, revealed Deputy Minister of Industry and Trade Do Thang Hai on November 2.  The average index of industrial production (IIP) in the first 10 months of this year increased 9.7 percent over the same period last year and remained higher than those of the last two years, he said.  In the reviewed period, the electricity and manufacturing sectors posted an IIP growth of 11.5 percent and 10 percent, respectively, while the mining and liquid and solid waste treatment sectors saw successive rises of 8.4 percent and 7.4 percent.  Electronics, computers and optical product production sectors also experienced high growth.  Meanwhile, the IIP of the coal mining sector rose only slightly by 5.2 percent while that of cigarette production was 2.7 percent and garment manufacturing was 5.1 percent, noted Hai.  Ho Chi Minh City is one of the leading localities with strong industrial production recovery with an IIP increase of 13.9 percent in October and 14 percent in the first 10 months of the year.  Nguyen Phuong Dong, Deputy Head of the municipal Industry and Trade Department, said the results reflected the effectiveness of the city’s efforts to remove difficulties for businesses.  Currently, the city is focusing on disbursing a credit package supporting small and medium-sized enterprises to develop support industries, he said.  Deputy Minister of Industry and Trade Do Thang Hai also asked localities to continue assisting businesses and roll out stronger measures to boost industrial production to fulfil the country’s yearly targets. Vietnam needs better quality forest products Demand for Vietnamese forestry products, excluding wood, has increased on the world market, though these products need to improve their quality to meet strict international manufacturing standards. According to the General Department of Forest under the Ministry of Agriculture and Rural Development (MARD), Vietnam has 14 million hectares of forest, which are home to 3,000 animal and plant species, excluding wood. The non-timber forest products include bamboo, rattan, pine and cinnamon. Other products having high demand as exports are anise and some medicinal plants, such as cardamom, amomun, morinda and Ngoc Linh ginseng. These products are primarily found in the northern mountainous provinces of Lao Cai, Yen Bai, Ha Giang, Lang Son, Cao Bang, Bac Kan and Quang Ninh. Truong Tat Do from the General Department of Forestry said worldwide demand was high for use of these non-timber forest products as spices and for medical treatment. He added that consumers sought natural oil from plants believed safe, especially cinnamon, anise, cardamom and amomun, which are used in medicines. Of note, the export value of non-timber forest products had increased since 2004, reaching an average of 200-250 million USD per year. Those products were exported to 90 countries and territories, including mainland China, Japan, the US, Taiwan and India.  The ministry had many programmes to support development of these products from 2011-15, and set up a target of 700-800 million USD in exports by 2020, as opposed to 200 million USD at present, reported the Nong Nghiep Vietnam newspaper. However, production and business systems had not been developed to meet the potential of these products and high demand for them on the world market, said Do. He added that progress had been slow because there were not specific policies on developing production and business for non-timber forest products. Tran Van Khoi, Deputy Director of the National Centre of Agricultural Promotion, said there were many kinds of non-timber forest products, such as pharmaceutical materials processed by the Ministry of Health, whose production was managed by MARD. Yet, the two ministries had not cooperated to develop products. In addition, trading of non-timber forest products had not been carried out with contracts, so the business remained uncertain. Further, Vietnam lacked coordinated policies on encouraging development of these products, resulting in production remaining low or unstable. Also, locations for producing the products were often in remote regions with poor infrastructures. Residents in these areas had low levels of knowledge about the industry, causing disadvantages in applying modern techniques in production. Experts have noted that to create sustainable development in the market for non-timber forest products, the forest sector should give priority to injecting capital for research of manufacturing and technologies to increase the value of the products, create products that are able to compete on regional and global markets and build brand names for export. Coal consumption for power production surges Vietnam’s demand for coal serving power generation is expected to rise by five million tonnes in 2016, said Nguyen Van Bien, Deputy General Director of the Vietnam National Coal-Mineral Industries Group (Vinacomin). Vinacomin recently asked the Ministry of Industry and Trade (MoIT) to work with relevant agencies to ensure an adequate supply of coal for electricity production. According to reports from MoIT, 10-month coal output was 34.6 million tonnes, escalating 4.9 percent compared to the same month last year. Meanwhile, coal consumption in the first ten months of this year was estimated at 29 million tonnes, a year-on-year increase of 2.35 percent. The amount sold in domestic market escalated 19.9 percent. Bien stated that floods hampered Vinacomin’s coal consumption in October, adding that the group needs to produce about 3 million tonnes per month in the last two months of this year to meet the annual target. The group’s revenue from January-October slid 3 percent as coal prices dipped compared to the same period last year. Securities Commission to develop green investing The State Securities Commission (SSC) is set to create orientation framework for the development of green financial products in the stock markets, contributing to the implementation of the country's green growth strategy, a top official has said. SSC Vice Chairman Nguyen Thanh Long told a workshop held on October 28 that the SSC would also take measures to encourage the participation of businesses and investors in green growth. Nguyen Son, Head of the watchdog's Stock Market Development Department, said that for the securities market, developing a green capital market is a strategic task to facilitate capital mobilisation for green projects. The Vietnamese markets had a total market cap of over 1,239 trillion VND (53.6 billion USD) as of September 30. At the workshop, representatives from the Hanoi and HCM City stock exchanges called for creating products such as green indices, green bonds, and green investment funds and mutual funds. Michael Abraham, managing partner of Germany-based Concerto Financial Solutions, said Vietnam could become the first country in the Indo-china region to have a green index, which would help raise its prestige. The index could allow investors to track the carbon efficiency of companies doing business in emerging economies. Michael Krakowski, chief technical advisor to the German Federal Enterprises for International Cooperation (GIZ)‘s Macro-Economic Reform And Green Growth Programme, said GIZ would continue to support the SSC in developing green products. The programme would, in 2015-17, support the SSC and market participants develop a green listing policy that would set disclosure requirements for green investment portfolios by listed companies and implements corporate social responsibility in the form of a code of conduct for the capital market, he said. GIZ has also helped develop concepts for green financial products to meet the demand for products that are resilient to climate change, he said. "These financial products will allow investors to make a positive impact on society and the environment, while pursuing their financial targets," Krakowski had told a workshop in April. The green economic development model, while a growing trend globally, is still new in Vietnam. But the Government, realising the importance of green growth, has made it a key focus in a Resolution passed in April on the socio-economic development strategy for 2011-20.- Garment sector forecast to further growth in year-end The garment and textile sector is expected to surge in the fourth quarter of this year thanks to Vietnamese enterprises receiving stable export orders until the year-end, said Nguyen Tien Vy, head of the Planning Department under the Ministry of Industry and Trade (MoIT), on November 2. A number of garment businesses have also taken orders until the end of the first quarter of 2016. According to the MoIT, garment and textile export turnover reached 2.2 billion USD in October, up 13.6 percent on the year and bringing the figure in the first 10 months of this year to nearly 19.2 billion USD, up 10.4 percent. In the period from January to October, Vietnam produced 259 million metres of fabric made from natural fibers and 2.62 billion units of garments, up 1.9 and 4.4 percent year-on-year, respectively. Meanwhile, nearly 547 million metres of clothes made from synthetic and artificial fibers were manufactured, a decrease of 5.6 percent. In order to boost exports of garment and textile products, the MoIT asked relevant agencies to take measures to remove obstacles for businesses and implement policies to improve the business environment and competitiveness.- FDI, domestic sector need better balance The development of the foreign direct investment (FDI) sector and the domestic business sector next year need to be better balance, Head of the Party Central Committee's Economic Commission Vuong Dinh Hue said. At a recent discussion in group by National Assembly delegates, Hue said the country's development in 2015 still depended on the FDI sector while domestic businesses still faced many difficulties, particularly businesses operating in the fields of agriculture, services and tourism. In order to tackle the difference in development of the two sectors, Hue said it was necessary to use FDI, focusing on businesses that already had a good value chain, good technology and good management. He noted that attention should be paid to small- and medium-sized FDI businesses to use technology and experiences of other countries. It should be noted that there are not many big corporations that invested billions of US dollars in Vietnam like Samsung group while it was said that this was now the era of small- and medium-sized businesses. It was also essential to take measures to boost development and improve competitiveness of domestic businesses, he said. There should have had preferential policies and support mechanisms to boost the domestic sector like the FDI sector. The State should quickly build and issue the law on supporting small- and medium-sized businesses as well as provide guidelines to help the business community effectively implement the revised Laws on Investment and Businesses, he said. Promoting the national startup spirit and building a national startup programme was needed, he said. However, it would require speeding up research and innovation and mechanisms to set up the Government risk investment fund as well as to attract risk investment funds both inside and outside the country, he said. "I hope there will be a new investment wave in Vietnam," he said. Another measure was to boost linkages between FDI and domestic businesses, Hue said. For example, FDI businesses who wanted to get preferential investment policies are required to have policies to connect with domestic businesses such as using domestic businesses as satellites to develop supporting industries. In the first six months of 2015, FDI reached an export value of 52.5 billion USD, a year-on-year increase of 20 percent, according to the Customs General Department. Meanwhile, the domestic sector posted an export value of 25.2 billion USD during the period, a year-on-year decrease of 8.4 percent. During the period, the FDI sector gained a trade surplus of 4.4 billion USD while the domestic sector's trade deficit reached 7.4 billion USD. Special regulations suggested to expedite sales of debts The chairman of the Vietnam Asset Management Company (VAMC) has recommended the National Assembly issue special legal regulations to expedite the current sluggish sales of non-performing loans (NPLs). VAMC Chairman Nguyen Quoc Hung suggested last week that it was necessary to issue a resolution or law that takes effect in 3-5 years to handle bad debts. Hung also recommended that the Government quickly ratify regulations on debt trading conditions in accordance with Vietnam's reality to allow for the creation of a debt trading market. As only the VAMC, the Finance Ministry-run debts and asset management companies (AMCs), and other AMCs under the umbrella of banks, were allowed to trade NPLs, the debt market needs further refining, more participants and a legal framework for settling bad debts, Hung said. Experts also attributed the sluggish sales of distressed assets to a lack of regulations that permit private and foreign investors to purchase bad debt, and the out-of-date legal framework that hinders measures aimed to recoup mortgaged assets. Truong Van Phuoc, Vice Chairman of the National Financial Supervisory Commission (NFSC), said that the shortcomings in the legal framework has hindered foreign institutions from stepping in to purchase NPLs in Vietnam at market prices. According to Hung, VAMC has helped remove NPLs from banks' balance sheets, coupled with banks' provisions for credit risks. VAMC acquired 90.23 trillion VND (4 billion USD) in bad loans at a book value of 82.73 trillion VND (3.69 billion USD) from credit institutions in 2015 through October 20, in exchange for special bonds. The accumulative amount of bad debt VAMC has purchased since its launch in 2013 totaled 225.6 trillion VND (10.07 billion USD). In fact, however, VAMC didn't actually buy the NPLs, but only housed them as they helped banks restructure their debt or sell them off. Statistics from the Government's financial watchdog NFSC also showed that as much as 45 percent of total NPLs has been held by VAMC, 28 percent has been handled with provisions and 27 percent through debt recoveries. According to experts, risks continue with banks, who must fully write off unrecovered debts over time by contributing revenues from their annual profits. How successful VAMC is in disposing of NPLs will determine banks' profit margins. The key to that is expediting sluggish sales of their distressed assets. Le Xuan Nghia, Director of the Business Development Institute, said that the profitability of the banking system was currently low, at half of earlier levels, as lenders were allocating sizable resources to resolve bad debt. Therefore, banking regulators should prioritise improving profit margins of local banks to help them consolidate. Further, according to Nghia, if banks' financial capacities are weak, they will not be able to purchase needed technological applications and might risk lagging behind their competitors.- Singaporean fund invests in Ho Chi Minh City Singaporean Genesis Global Capital and Phuc Khang Corp signed an agreement on November 1 to develop a green residential building project in Ho Chi Minh City.  Under the agreement, the fund bought 30 percent of the Diamond Lotus project, worth 300 million USD, and would lend it over a period of six years, said Phuc Khang Corp Chairman Tran Tam.  The company is investing in construction of residential and urban areas on 1,000 hectares. In 2016, it plans to provide 3,000 environmentally friendly apartments that meet US standards in the central districts.  Ng Chuan Kai, director of Genesis Global Capital, highlighted the city’s potential for international integration and incentives Vietnam has offered to foreign investors.  Vu Xuan Thien from the Ministry of Construction said the agreement marks the first long-term retail deal between a local enterprise and an international investor.  Diamond Lotus, which cost nearly 1.27 trillion VND (56.6 million USD) and meets the US’s LEED standards, is located on 1.68 hectares on Le Quang Kim Street in District 8.  It has three apartment buildings and a 500-sq-metre garden on the roof. Can Tho attracts 20.6 million USD in FDI capital Can Tho attracted 10 projects with a combined capital of 20.6 million USD in the first 10 months of the year, according to Nguyen Van Hong, Director of the city’s Department of Planning and Investment.  During the period, the city also modified nine investment certificates with a combined capital of 9.5 million USD.  The city has a total of 220 valid projects, 208 of which are operational. Five are under construction and seven have not been implemented.  Projects in industrial zones take up 296.7 hectares of land and have a combined capital of 1.957 billion, accounting for 45.7 percent of the total registered capital.  The city’s industrial production increased 6.89 percent on the year.  According to the municipal Department of Planning and Investment, the city would provide detailed, exact, comprehensive information to investors, helping promote domestic and international investment,  It would focus on improving its investment environment and competitive capability index to make it more appealing to investors. Seafood export recovery unlikely this year: VASEP The Vietnam Association of Seafood Exporters and Producers (Vasep) reported that seafood export has been reducing for the last ten months and unlikely to recover this year. Slow consumption, down export price and the depreciation of many foreign currencies against U.S. dollar have strongly impacted export of Vietnamese seafood, especially shrimp. Total turnover reached US$4.8 billion in the first nine months this year, down 16.4 percent over the same period last year. Shrimp saw a reduction of 27-30 percent. The reduction trend did not end to all main export items in October. Total export turnover in the first ten months was estimated at US$604 million, a year on year decrease of 12 percent. Of these, shrimp fell down 33 percent, pangasius fish tumbled 30 percent, tuna dropped 11 percent, cuttlefish and octopus reduced 28 percent. The association forecast slight increase in the rest two months this year compared to the first ten months. However, it will still be 20-25 percent lower than the same period last year. The turnover is expected to hit US$6.6 billion for the whole year, down 15 percent over 2014. VietJet Air opens new local routes The low-cost carrier Vietjet Air has started selling tickets for two new air routes linking Nha Trang to Hai Phong and Vinh to Buon Ma Thuot. The route between the central coastal city of Nha Trang and the northern city of Hai Phong will be operational with five flights per week starting on November 19, on Tuesday, Thursday, Friday, Saturday and Sunday. The flight duration is around 1 hour 45 minutes. Vinh – Buon Ma Thuot route will be launched on November 20 with three round-trip flights per week, on Monday, Wednesday and Friday. Non-stop flight time is 1 hour 25 minutes. One way flight tickets for Nha Trang- Hai Phong and Vinh - Buon Ma Thuot routes will be respectively VND599, 000 and VND299, 000. Tickets are available at www.vietjetair.com and VietJetAir ticket offices nationwide. Petrovietnam seeks import tax cut for Dung Quat Refinery   Vietnam Oil and Gas Group (PVN) is seeking approval to lower tax rates at Dung Quat Oil Refinery because of a lack of competitiveness against imported fuels. PVN has claimed in a report to the Government Office that tax policies are having a negative impact on the operation of the Dung Quat Refinery. According to PVN, the oil refinery was facing with high inventories because its products could not compete with imported goods. The diesel and mazut import taxes from ASEAN countries was cut to 5% and 0% from January 1 this year in accordance with the ASEAN Trade in Goods Agreement. However products from Dung Quat are still bizarrely subject to an import tax of 10%, forcing a number of local businesses that bought petroleum from Dung Quat to choose other sources. Since March, several big customers including Petrolimex have reduced its orders. Since mid-August, the demand for diesel in Vietnam has been on a downward trend so businesses prefer imported options because of tax incentives. Dung Quat is facing challenges since diesel is its main product. The refinery produces 3.3 million tonnes per year, accounting for half of its total output. It is estimated that the inventory at Dung Quat will reach 110,000 cubic metres and if customers postpone their order until next year then the inventory would reach 190,000 cubic metres, with Dung Quat's inventory's capacity of only 150,000 cubic metres. Dung Quat Refinery uses high quality crude oil and its other logistic costs are also high. Moreover, under special treatment approved by the Ministry of Finance in 2012, domestically produced petrol at Dung Quat Refinery is allowed to include import taxes in its prices. If the general import duties are lower than the incentives then government will have to make up for the gap. Vietnam agriculture to benefit from free trade Officials and economists see Vietnam's membership of the Trans-Pacific Partnership bringing more opportunities than challenges for the country's agriculture sector. Speaking on the sidelines of a recent seminar on TPP and its impacts on the country's agriculture sector organised by the University of Economics and Law and Van Hien University, Deputy Minister of Agriculture and Rural Development Ha Cong Tuan said TPP would bring huge opportunities for Vietnam’s speedy development. "It will present Vietnam the opportunity to assess the strength and weakness of its agricultural sector." Other TPP members are likely to become huge consumers of Vietnam's agricultural products, which would help the country reduce its dependence on traditional markets, he said, referring especially to China. In the first eight months of this year China bought 35 percent of Vietnam's total farm exports and sold over 53 percent of the agricultural inputs it imported. With tariffs scrapped or reduced to very low levels under the trade deal, Vietnam is expected to steal a march on its non-TPP rivals in exporting seafood, furniture, rubber, pepper, cashew. The trade deal would also help Vietnam attract more investment, including foreign, in its agricultural sector. FDI in the sector has been worth 3.4 billion USD this year. Vietnam is set to straddle the TPP rice market like a behemoth. Nguyen DinhBich of the Ministry of Industry and Trade's Trade Researcher Institute said Vietnam accounts for 26.7 million tonnes of the 45.3 million tonnes of the grain produced annually by TPP members. The trade deal is expected to provide Vietnam with an opportunity to restructure agriculture by boosting research, improving agricultural infrastructure, and developing production chains. Now the country's agriculture is mostly small scale or household-based. For instance, there are nearly 12 million farming households of whom 80 percent cultivate less than a hectare. Four million households rear pigs, but 77 percent have less than five; 7.9 million households raise chicken, 90 percent have less than 49. Of 21 million agricultural workers, over 97 percent have got no training. But Tuan said TPP membership is likely to usher in comprehensive changes, creating production chains with support from research organisations. Enterprises would be partnered by new-style co-operatives that bring small farmers together under the large scale farms programme, he added. SMEs using e-commerce well Vietnamese exporters have not used websites effectively for their operations, while small and medium-sized enterprises (SMEs) have made full use of e-commerce.  The results of a study on the Internet, e-commerce and SMEs activities in Vietnam, released in Hanoi on October 29, showed that the Internet has not ensured higher value for all sectors, while the number of computers have considerably contributed to SMEs' operations. The study conducted by the Central Institute for Economic Management (CIEM), the Institute of Regional Sustainable Development (IRSD) and Vietnam E-commerce Association (VECOM), and sponsored by tech giant Google, also said the Internet has helped to increase turnover and profits rapidly with the application of technology, especially in SMEs. In addition, the Internet has also sharply reduced transaction costs and has created a level playing field for businesses. Tran Kim Chung, CIEM Deputy Director, said he was not surprised with the results as in reality, the Internet and IT played a vital role for businesses. "Enterprises should take advantage of the Internet to develop, while modernising the economy," Chung said. Alex Long, country lead, government affairs and public policy, Google Asia Pacific, said the Internet could contribute great value to an economy. Vietnamese businesses could utilise the Internet to cut costs, expand their markets and improve labour productivity. He said Google wanted to co-operate with Vietnam in helping its businesses to fully utilise the potential of the Internet. Statistics from the industry and trade ministry's Vietnam E-commerce and Information Technology Agency (Vecita) have revealed that with up to 40 percent of its people using the Internet, Vietnam is one of the fastest growing economies in terms of Internet users. The country's e-commerce has been growing and providing potential as well as development opportunities to SMEs. The e-commerce turnover reached 2.2 billion USD in 2013, and is expected to touch 4 billion USD this year. SMEs can expand their promotion, access international markets and reduce intermediate segments. However, SMEs have also faced difficulties, especially tax issues. Businesses have had to pay about 20 percent of their turnover for e-commerce services, excluding online advertisements. The issue of brand protection has also been a headache for enterprises as a large number of copyright violations are occurring in the country. The study suggested that the Government should provide a more favourable legal environment to the markets' development, both in Internet services and safe e-commerce transactions. Anti-dumping lawsuits weigh down VN exports Many products in Viet Nam are facing the risk of their market shares and revenues narrowing down due to anti-dumping investigations and lawsuits. The number of anti-dumping cases concerning Vietnamese export products were caught in a tidal wave recently, according to announcements of the Viet Nam Competition Authority. Initial statistics showed that from the beginning of this year, nearly 20 anti-dumping lawsuits were filed against Vietnamese export products, bringing the total trade defence cases to nearly 100 so far. Products faced with anti-dumping lawsuits this year were mainly steel, fibre, bicycle tyres and tube, apart from medium density fibre boards and iron. The most recent case was India initiating anti-dumping investigations concerning imports of AA dry cell battery (coded HS 8506.10) exported from Viet Nam, the competition authority announced last Thursday. According to the Viet Nam Competition Authority, many import markets were paying increasing attention to Viet Nam for trade frauds, which would threaten exports. Nguyen Phuong Nam, deputy director of the Viet Nam Competition Authority, warned that the steel industry faced the highest risk of anti-dumping lawsuits. In September alone, three anti-dumping lawsuits concerning steel products were initiated. Nguyen Nam, director of An Nam Fibre Company in southern Binh Duong Province said that regardless of the conclusion, anti-dumping investigations once announced would badly impact exports as other importers would take a stricter view. According to the World Trade Organisation Centre under the Viet Nam Chamber of Commerce and Industry, with Viet Nam signing and negotiating a number of free trade agreements, anti-dumping cases were anticipated to soar and make it even more complicated. "It is important that businesses enhance their awareness of trade defence," Nguyen Thi Thu Trang, from the WTO Centre said.  VAMC cuts rates on NPLs denominated in euros, dong The Viet Nam Asset Management Company (VAMC) has cut the applicable interest rates by 0.3 per cent of the Vietnamese dong and the euro for non-performing loans (NPLs) purchased from credit institutions. Accordingly, the interest rate on NPLs denominated for the dong is reduced to 9.6 per cent per year while the rate on NPLs in the euro is 5.4 per cent per year, effective in the fourth quarter this year. However, the interest rate on NPLs denominated in the US dollar in the fourth quarter this year remains unchanged at 4.3 per cent per year. According to the State Bank of Viet Nam's regulations, the VAMC is required to review and adjust the interest rates applied to the purchased NPLs in keeping with the repayment capacity of the borrowers, the interest rates prevalent in the market and based on the agreement with customers. Those interest rates will be publicised by the VAMC quarterly. This is the sixth time the VAMC has announced an adjustment in interest rates applicable to the purchased NPLs. The company had adjusted interest rates for the first time during the second quarter of 2014, when it decided to significantly cut interest rates on the bought NPLs in dong from 15 to 18 per cent per year to only 10.7 per cent per year. In the third quarter this year, the VAMC kept unchanged the interest rates of 9.9, 4.3 and 5.7 per cent applicable to the purchased NPLs denominated in dong, US dollar and the euro, respectively. The VAMC acquired VND90.23 trillion (US$4 billion) in bad loans at book value of VND82.73 trillion ($3.69 billion) from credit institutions till October 20, 2015, in exchange for special bonds. The accumulative amount of bad debt the VAMC has purchased since its launch in 2013 totals VND225.6 trillion ($10.07 billion).  HCM City seeks to boost SMEs Developing small and medium-sized enterprises (SMEs) is one of the ways to increase the private sector's contribution to the city's economic growth, economists told a conference held in the city last week. They said the private sector, especially SMEs, has made a major contribution to the city's growth in recent decades, but still requires support from the Government to fulfill its potential and participate in the country's integration process. According to the city Department of Planning and Investment, the non-state economic sector's contribution to the city economy has been rising consistently, going up from 50.6 per cent in 2010 to 58 per cent last year. The private sector mainly including SMEs alone accounted for 60 per cent of the city's GDP annually. Dr Nguyen Tan Phat of the HCM City National University said, "Despite significantly contributing to the city economy the private sector will face huge hurdles in the coming years when the city and whole country integrate with the global economy. "This is because a majority of the private sector is made up of SMEs." Dr Huynh Van Minh, chairman of the HCM City Union of Business Associations, concurred with Phat, saying the biggest difficulties SMEs face are a shortage of capital and skilled human resources. "Despite the banking sector's efforts to lower them, lending interest rates are still too high and beyond the repayment capacity of many SMEs." Dr Ha Thi Thieu Dao of the Banking University of HCM City said, "Although SMEs are really in need of funds, they cannot get bank loans because they cannot get guarantees from the Credit Guarantee Fund due to many reasons. "One of the reasons is the that fund is afraid of risk. "Another reason is that 30 per cent of SMEs do not know about the existence of the Credit Guarantee Fund. Consequently, in nearly a decade (2007-2014) only 24 out of 150,000 SMEs operating in the city received guarantees from the fund to get bank loans." Tran Viet Anh, vice chairman of the Plastics and Rubber Association, said supporting SMEs is vital for ensuring the city's strong economic development. The economists also suggested some other measures to help develop the city economy. Some called for preventing transfer pricing fraud by some foreign companies. Tran Thi Nga, deputy director of the Taxation Department, said: "The Viet Nam Tax Authority has already established a Transfer Pricing Inspection Department. The city also has a plan to set up a transfer pricing inspection office." Most delegates agreed on the need to focus on industrial production, ensuring domestic firms are ready to cope with the influx of foreign businesses. Anh said: "Local manufacturing enterprises now account for only 39 per cent of the city's total number. This is too low compared with the city's economic scale especially when it is required to grow strongly to adapt to the country's accession to free trade agreements and the Trans-Pacific Partnership (TPP)." Dr Nguyen Chi Hai of the HCM City University of Economics and Law said the city should earmark a large amount for developing its technical infrastructure. Good technical infrastructure would boost domestic manufacturing, he added.  Cement maker Beton 6 to be delisted in November Cement maker Beton 6 Joint Stock Company (Beton 6) will be removed from the HCM Stock Exchange (HOSE) on November 27, HOSE reported on Friday. Beton 6 is now listed as BT6 with 33 million shares on HOSE and has been warned several times for delaying information disclosure. This is a part of the restructuring plan that Beton 6 is carrying out in order to improve its production efficiency. The company will be listed again after the plan shows good results. Before being delisted, Beton 6 planned to buy back one million shares, however, the company was unable to buy back all these shares. In the third quarter of this year, Beton 6 earned a revenue of VND289 billion (US$12.8 million) and a net profit of VND5.76 billion ($256,000), an increase of 43 per cent and 304 per cent over a year. HAGL Agrico to sell 59 million shares Hoang Anh Gia Lai Agricultural Joint Stock Company (HAGL Agrico) will sell 59 million shares to strategic investors at the price of VND28,000 per share to gain VND1.65 trillion (US$73.3 million). The income from this deal will be spent on making additional investments for the company's projects. HAGL Agrico has approved two strategic investors for this deal, which are Cuong Thinh Rubber Investment Company Limited and An Thinh Rubber Investment Company Limited. The two companies will buy 27.5 million shares and 31.5 million shares in the deal, respectively. The deal will be carried out after the State Securities Commission confirms it receives the application for this deal from HAGL Agrico. The deal must be completed by the end of this year. HAGL Agrico is now listed as HNG on the HCM Stock Exchange and has a chartered capital of VND708 billion ($31.5 million). HAGL Joint Stock Company is the biggest shareholder in HAGL Agrico, holding 86 per cent of the company. Mobile World sees net profit up 52% Mobile World Investment Corporation (MWG) saw an increase in both revenue and net profit in the first nine months of this year. The company's revenue was VND17.5 trillion (US$778 million), an increase of 62 per cent over a year earlier and equal to 74 per cent of this year's plan. The company's net profit rose 52 per cent over a year to VND744 billion ($33 million), equal to 84 per cent of this year's target. Mobile phones remained the most important part in the company's business, contributing 59 per cent of the company's profit, followed by tablets and laptops with 11 per cent. This year, MWG has opened 141 new Mobile World stores and 19 new Green Electronics in the country, raising its total number of stores to 521. FTAs to demand higher standards Vietnamese businesses must pay attention to non-tariff measures included in free trade agreements to be able to grab opportunities for promoting exports, experts said. A conference on Thursday in central Da Nang City heard that Vietnamese firms were anticipated to encounter tougher technical barriers and rules of origins, especially on agricultural and garment products. According to Dang Thanh Phuong from the European Trade Policy and Investment Support Project (EU-MUTRAP), exports of many products to major markets have fallen short of their potential due to the use of non-tariff measures of import markets and that Vietnamese products were struggling to meet the requirements. She pointed to technical specifications as reasons behind the under-performance, because the local criteria were largely under common standards. Many export companies were of the small scale category and had inadequate competencies to fulfil the requirements of foreign importers. Non-tariff measures asked Vietnamese businesses to enhance product quality, from material selection, processing to packaging and shipping, experts said, urging firms to renovate production technology to capitalise on opportunities for export expansion to strict markets like Japan, Korea and the United States. Experts also urged quality criteria set by importers to be collected and carefully studied, adding that Vietnamese businesses could seek for information supports from trade consultancy agencies. Regular updates were also needed. A set of standard technical systems should be developed to promote product quality in line with demand of import markets and enhance added values of products.  VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR