BUSINESS IN BRIEF 12/12 100 Indonesian companies seek business opportunities in Vietnam   100 Indonesian companies in various sectors have come to Vietnam in the first Indonesia Trade Fair ever to showcase their products and services and seek partners. The event, held between December 10 and 12 in Hanoi on the occasion of the 60th anniversary of diplomatic relations between Indonesia and Vietnam, features companies in a wide range of fields such as automobile and spare parts, machinery, oil and coal, electronics and home appliances, construction and consultancy, pharmaceutical and medical equipment, chemical products, food and beverage, banking and investment services and textile. Most of the participants are new to the Vietnamese market and this is their very first time to get to know and explore the opportunities here. According to Sadikin, Minister Counsellor of the Embassy of the Republic of Indonesia in Vietnam, the event is among Indonesia’s efforts to achieve the target of $10 billion trade value with Vietnam in 2018. “As we are preparing ourselves for the implementation of the ASEAN Economic Community next month, this is the best chance for the business communities of the two countries to get closer and cooperate with each other in order to reap the benefits from the ASEAN Economic Community,” he said in the welcoming remarks of the trade fair. “The trade fair will also tighten the relationship between the two business communities,” added Do Thang Hai, Vice Miniser of Trade and Industry of Vietnam. Trade between Vietnam and Indonesia was $5.4 billion in 2014, up 11.6 per cent on year. HCM City hosts ASEAN+3 Young Entrepreneurs Forum The ASEAN + 3 Young Entrepreneurs Forum opened in HCM City on December 11 involving young entrepreneurs, leaders, officials and outstanding youths from 10 ASEAN countries and the Republic of Korea, Japan and China. The four-day forum will discuss burning issues, such as ASEAN Economic Community (AEC) – opportunities and challenges, and the role of young people in promoting business initiatives and sustainable development of the ASEAN Community (AC). The forum will also emphasise the importance and great role of young entrepreneurs in the formation of AEC and sustainable building of AC.   Domestic firm cooperates with Koyo Corp in clean energy Sao Mai Group from An Giang province on December 10 signed a cooperative deal with Japanese Koyo Group’s Koyo Corporation on solar energy generation in Vietnam. They will also build a solar panel manufacturing factory at Sao Mai Industrial Zone (IZ) to meet domestic and export demands. Initially, Koyo will help Sao Mai assemble solar cell panels at its factories in Vam Cong IZ, Dong Thap province, smart outdoor lighting systems using solar energy in its urban residential projects and LED lighting systems in Sao Mai offices and factories. Koyo Corporation CEO Inomata said Vietnam has huge potential for solar energy development and Sao Mai group meets all requirements and conditions for cooperation with Koyo. Koizumi purchases 23% of domestic steel company’s shares Japan’s Koizumi group has successfully bought 23% of Vietnam QH Plus Ltd Company’s shares and cooperated in developing support products for the domestic construction sector. According to an agreement signed by Koizumi and QH Plus, Koizumi products will be included in the QH Plus trading networks while QH Plus products will also appear in the Japanese group’s sales channels. Khong Phan Duc, director general of VietinBankSc - consultant of the M&A deal - said QH Plus and Koizumi cooperation will practically benefit both sides in terms of goods distribution and promotion of their brand names. Set up in 2006, QH Plus specialises in trading steel products and building materials and accessories. Its revenue hit US$90.63 million last year and is expected to reach US$100 million this year. It has established a representative office in Japan and exported products to China, Singapore, Laos, Cambodia, Malaysia and the Philippines. Koizumi is a Japanese leading group in home appliances with 9 subsidiary companies and more than 100 sales stores in Japan. Its revenue hit US$1.14 billion last year. Four TPP countries hold discussions in Washington DC A dialogue was held yesterday in Washington DC, the United States (US), with around 300 representatives from four Trans-Pacific Partnership (TPP) member countries discussing the trade deal's opportunities and challenges. The participants said that a majority of the residents and business communities believed the TPP would be beneficial to member countries through tariff elimination, trade and investment liberalisation, and the global supply and value chains. Four ambassadors of Viet Nam, Peru, Canada and Japan to the US at the dialogue agreed that the TPP did not conflict with the World Trade Organisation's commitments and other regional agreements, but would promote trade liberalisation instead. According to Vietnamese Ambassador to the US Pham Quang Vinh, the TPP played a significant role in both the economy and development strategy of Viet Nam and other member countries. However, as a developing economy, Viet Nam would face a number of challenges in meeting high standards raised in the TPP, such as taking advantage of opportunities arising from the trade deal and protecting local production against competition from imported products, Vinh was quoted by Vietnam News Agency as saying. It would take time to adapt to the TPP, Vinh said, adding that Viet Nam hoped to receive technical support from other member countries. At the dialogue, Vinh said that TPP would play an important role in shaping global trade in the next 20 years. However, he stressed that it was important for the trade deal to prove its success in practice, which would then have a spill-over effect and lead to other trade mechanisms. The TPP member countries all agreed to make the signing and implementation of the trade deal a priority. TPP agreement significant to Vietnam and other members Vietnamese Ambassador to the US Pham Quang Vinh said the freshly-concluded Trans-Pacific Partnership (TPP) agreement is strategically and economically important to Vietnam and other member countries, while attending a recent dialogue in Washington D.C. Jointly held by the Embassies of Vietnam, Canada, Peru and Japan in the US, the dialogue drew hundreds of scholars, experts and press representatives to discuss opportunities and challenges from the upcoming signing, ratification and execution of the world’s largest free trade pact. The Ambassadors agreed that the TPP is expected to boost the liberalisation of trade in the World Trade Organisation (WTO) and other regional trade agreements. Most of businesses and people in the four countries supported the TPP due to a number of its benefits such as the elimination of tariff barriers, facilitation of trade and investment, and connection of global supply and value chains. Vietnamese Ambassador Pham Quang Vinh said Vietnam has actively engaged in the negotiations of the TPP and strived to forge ahead with the ratification and implementation of the trade pact as committed. However, as a developing country, Vietnam is facing a lot of challenges in meeting TPP high standards, utilising opportunities to expand export markets, and protecting domestic manufacturing sectors from competitive imported goods, he said, adding that Vietnam hopes to receive technical support from other TPP member countries. The Ambassador expressed his confidence that the TPP will make significant contributions to shaping the global trade in the next 20 years. Regarding queries on the possibility of the US’s recognition of Vietnam’s market economy status, Ambassador Pham Quang Vinh said many countries, including TPP members, recognised Vietnam as a full market economy, and Vietnam is actively working with the US on this issue. Regarding the admission of new members to the TPP, Vinh said other countries are able to join the pact as long as they could meet the TPP high standards and commitments and receive agreement from TPP members. The TPP started out as P-4 with Chile, New Zealand, Singapore and Mexico. The US joined in September 2008 and Vietnam in early 2009. The deal now brings together 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam. The completion of the world’s largest free trade pact on October 5 in Atlanta, the US, has elicited positive responses from many countries. After the signing, the document must receive approval from member countries’ governments and parliaments before taking effect. The TPP will become a free trade region of 800 million people, accounting for 30 percent of global trade and about 40 percent of the world’s economy. Vietnam is expected to benefit the most among the 12 countries. The pact will help expand Vietnam's GDP by 23.5 billion USD by 2020 and 33.5 billion USD by 2025. Businesswomen’s participation in economic integration Strengthening the active participation of businesswomen in regional integration was discussed at a conference on December 10 in Hanoi. The event was co-organised by the Vietnam Women Entrepreneurs Council under the Vietnam Chamber of Commercial and Industry (VCCI) and the Department of Enterprises Development under the Ministry of Planning and Investment. It saw the attendance of female entrepreneurs from the 10 ASEAN-member nations, and representatives from ministries and sectors. Deputy Director of the Department of Enterprises Development Nguyen Hoa Cuong said many women are running small- and medium-sized enterprises (SMEs) in Vietnam, adding that the Government has devised numerous incentives to boost their enterprises’ development. Many female participants shared the views that a wide range of activities have been conducted to support the entrepreneurs’ community, including communication, training, and financial, technical and technology assistance. President of the ASEAN Women Entrepreneurs’ Network (AWEN) Nguyen Thi Tuyet Minh, who is also Chairman of the Vietnam Women Entrepreneurs Council, called on businesswomen to equip themselves comprehensively in a bid to seize opportunities and tackle challenges from international integration. She also suggested a roadmap be developed for improving labour productivity, production technology and management capability for win-win integration. Vietsovpetro anticipates 5 million tonnes of crude oil in 2016 Vietsovpetro, a joint Vietnamese-Russian enterprise for oil and gas exploration, has set to exploit 5 million tonnes of crude oil and put into operation several oil fields in 2016. The information was heard at the 45th meeting of Vietsovpetro’s Council in the southern province of Ba Ria- Vung Tau on December 10. The event saw the participation of representatives from ministries and sectors of the Vietnamese and Russian Governments, the Vietnam Oil and Gas Group (PetroVietnam), the Russia’s oil and gas group AO Zarubezhneft and Vietsovpetro executives. The meeting approved construction and repair plans for sea-based facilities, as well as plans on finance and production zone expansion. In 2014, Vietsovpetro brought ashore 5.2 million tonnes of crude oil, earned nearly 2.19 billion USD, and contributed to the State’s budget nearly 1.138 billion USD. The group had put into operation the ThTC-02 oil rig in the Tho Trang (White Rabbit) oil field one and a half months ahead of schedule. Japan eyes cooperation with Can Tho on hi-tech agriculture A delegation of 32 Japanese businesses operating in high-tech agriculture has visited the Mekong Delta city of Can Tho to learn about cooperation opportunities in the field. During a working session with senior officials of the city on December 10, head of the Yasuzumi Hirotaka, chief of the Japan External Trade Organisation (JETRO) office in Ho Chi Minh City and head of the delegation, introduced Japan’s environmentally friendly technology and its application in agriculture development. With its advanced science-technology solutions, Japan is keen to help Vietnam minimise environmental pollution in agricultural production process while improving productivity and quality of farm produce. Chairman of the municipal People’s Committee Vo Thanh Thong expressed his hope that the Japanese side will support and transfer Japan’s technology in agriculture with the aim of bringing more benefits to farmers in the Mekong Delta, including Can Tho. At the session, the two sides expressed their wish to promote cooperation in agricultural machines, seed varieties and fertiliser. On the occasion, Japanese businesses introduced a high-tech machineries and equipment, such as combine harvesters, food driers, tools for gardening, and greenhouse system, and environmentally-friendly fertiliser and plant protection products.- Supply chains key to farmers' incomes  Global trade agreements including the Trans-Pacific Partnership of which Viet Nam is a party, will require improved management of production and services from local companies, including more effective use of supply chains, Ho Thanh Phong, rector of Ho Chi Minh International University, has said. In an interview with Viet Nam News, Phong said that a new managerial approach would be necessary if the country wants to maintain its competitiveness in a more liberalised trade environment. "These improvements would help create high-quality products that are reasonably priced," said Phong, who was speaking at the Asia-Pacific Industrial Engineering and Management Systems Conference that began on Wednesday in HCM City. The fields of industrial engineering and management are "rather new", he said, adding that only two universities in the country provide training in the fields. More than 370 presentations will be given during the conference by scholars and researchers from 19 countries and territories. Phong said that his research showed that effective design and management of supply chains would help stem the decline in farmers' profits. Viet Nam has long been regarded as a land of special tropical fruits such as dragonfruit and milk-apple. According to the General Statistics Office, the total area of agricultural land accounted for 79.4 per cent of the country's total land area in 2013. However, the supply chain for such fruits is facing various problems, which has led to a considerable drop in profits. One example is the milk-apple, a specialty fruit with good quality and exclusive flavour grown mainly in the Mekong Delta region, Phong said. "In the last 10 years, the fruit has had rapidly decreasing prices due to the ineffective operation of the supply chain network," he added. The procurement hubs where farmers sell their produce are not located in areas near farmers. As a result, the fruit is transported from and to many places and finally to a assembly point before being transported to big cities. Phong said the method of storing the fruit and productivity control by farmers in response to customer demand has also affected profits. Farmers, for example, do not know how much to grow as they cannot adequately forecast customer demand. As a result, they sometimes grow too much and have an oversupply, leading to low prices. Farmers also do not have refrigerated warehouses that can store the fruit, which can start to spoil within two days. Phong said that an effective supply chain would include suppliers, procurement hubs, manufacturing plants, warehouses and distribution centres. According to the US-based Dole Food Company, the world's largest producer of fruits and vegetable products, market trends in recent years show an increased desire for canned and processed fruit. According to the Food Manufacturing magazine, published in the US, frozen and canned fruit items are the largest sectors of the food industry, popular for their convenience. Phong said that milk-apples could be frozen in bags, processed in canned syrup in cans, used in smoothie powders or in ice cream products. The transportation of the processed fruit would be easier as the products would not have to rely exclusively on air to maintain freshness. Farmers could reap the benefits of processed fruit as they could use fruit with blemished skin but fresh pulp, Phong said. The selling price would also no longer be affected by dealers, Phong said. At the conference, a group of researchers from Taiwanese universities and institutes recommended the use of a computational analysis method for integrated supply chains in Asia. The Mixed Integer Non Linear Programming model helps to minimize costs. It integrates production, transportation and inventory aspects for temperature-sensitive and perishable products that need special consideration during shipment in global supply chains. The model has helped solve practical problems and given insights to export- import processes in Asia, they said. Local beer players face foreign firms The local beer market is set to face tough competition due to a rising number of foreign brewers moving into the market after Viet Nam joins the Trans-Pacific Partnership (TPP), experts said. Under the TPP agreement, Viet Nam's imported beer tax from member countries will be reduced from 35 per cent to 0 per cent. As a result, imported beer will flood Viet Nam. Both international and local players are expected to step up marketing activities, new product developments as well as expanding distribution networks. Sabeco is the biggest Vietnamese beer maker, with a 46-per-cent market share. The Hanoi Beer Alcohol and Beverage Joint Stock Corporation (Habeco) accounts for 17.3 per cent of the market. And Vietnam Brewery Limited (VBL), a joint venture business between Saigon Trading Group (Satra) and Asia Pacific Breweries Ltd. (APBL) which is now Heineken Asia Pacific Pte Ltd, accounts for an 18.2 per cent market share, according to Euromonitor's market report. Sabeco holds 100 per cent of the charter capital in three member businesses and long-term investments in 19 associated companies. It reported total sales of nearly VND29.8 trillion (US$1.4 billion) and a pre-tax profit of VND3.672 trillion ($171.6 million) in 2014. According to Euromonitor, in 2014, Sabeco reached the highest market share with a revenue of VND30 trillion ($1.3 billion) but had profit of VND4 trillion ($177 million) only. Profit of both Sabeco and Habeco reached VND5.4 trillion ($240 million) but is still lagging behind that of VBL with VND6.2 trillion ($275 million). An industry insider said despite the high revenue of Sabeco and Habeco their products are still focused on the medium market segment thus leading to low profit while foreign players have used good marketing and a reasonable price strategy to bring higher profit. According to Mikio Masawaki, the new general director of Sapporo company, the difficulty in building its brand name and advertising products was solved after its Japanese-backed beer maker Sapporo entered deeper into Viet Nam by taking control of a local brewery venture with hopes of increasing its share in this lucrative market. Sapporo International has concluded a contract to buy 29 per cent of Vietnam National Tobacco Corp (Vinataba) in its Vietnamese beer venture. After the transaction, Sapporo Vietnam became a wholly-owned subsidiary of the Japanese beer maker. Currently there are 4,000 retailers selling Sapporo products, mostly in central HCM City. The figure is expected to climb to 7,000 in February next year. In May this year, Belgium-based brewer Anheuser-Busch InBev opened its first brewery in Viet Nam. The plant, covering 100,000 square meters in the southern province of Binh Duong, will produce 50 million liters of beer a year. It said capacity will be doubled in the future. The plant will initially produce the company's global brands, including Budweiser and Beck's. The facility will help serve more than 90 million consumers in Viet Nam, according to Anheuser-Busch InBev. Rules of origin make it hard for garment and textile exports The Trans-Pacific Partnership and EU-Vietnam Free Trade agreements’ stiff rules of origin will make it hard for Vietnam to expand its garment, textile and footwear exports to these markets. Le Thanh Thuy deputy general director of Singaporean-Vietnamese garment and textile joint venture Norfolk Hatexco, told VIR that her company would not be able to benefit from tariff slashes under the Trans-Pacific Partnership (TPP) and the EU-Vietnam Free Trade Agreement (EVFTA), though it was exporting products to the US, one of the TPP member states, and several European nations. “It is because the company almost imports materials from Hong Kong, not from TPP and EVFTA member states,” Thuy said. Quach Thi Nhung, a South Korean garment maker KJ Vina representative, also told VIR that her company imported materials from China and Hong Kong, and products were exported to the US. This would mean that this company would not be able to enjoy tariff incentives under the TPP, she said. According to the World Bank’s latest report on the TPP’s impacts on Vietnam, “a large part of Vietnam’s current exports in the garment and textile industry would likely not comply with the TPP’s rule of origin (ROO) requirements.” Under the TPP’s “yard forward” ROO, to benefit from a 0% imported tariff rate, instead of the current 15-20%, all manufacturing processes including yarn spinning, knitting and dyeing must be implemented in a TPP member country. According to the report, most imported yarn and fibre used by Vietnam’s garment producers are sourced from non-TPP territories, with Taiwan (32.6%), China (27%), South Korea (14.6%), Thailand (10.5%), and Indonesia (4.1%). Materials imported from TPP member states occupy 5.3%. Meanwhile, under the EU-Vietnam Free Trade Agreement (EVFTA), the EU will eliminate duties within seven years for Vietnam’s textiles, apparel and footwear products, from the existing duty rate of 12.4%. However, to benefit from the preferential access, this agreement’s strict ROO for garments require the use of fabrics produced in Vietnam. This would also mean that Vietnam will find it difficult to meet these EU strict ROO requirements. Still, several garment firms like Thanh Cong Textile Garment Investment Trading Company and X26 Joint Stock Company said they would benefit from the TPP and the EVFTA as they had close production chains, from fibre, cloth, yarn and buttons to finished products. “We are expecting to benefit from the TPP and the EUFTA. It is expected that our company’s garment exports to the US, Japan, Australia and Canada [which are TPP member states] will annually advance 25-30%, thanks to tariff slashes,” said Nguyen Viet Thang, head of Technical Division under X26 company producing garments, footwear and wooden products. All materials are sourced from the company’s subsidiaries. Also according to the World Bank, ROO also creates opportunities for a slew of foreign firms to come to Vietnam to directly make textile, garment and footwear materials. For instance, Hong Kong’s Texhong Textile and Garment Group is building a $300 million yarn plant for the first phase in Quang Ninh province, where Hong Kong’s Black Peony is also building a $100 million jean cloth producing factory. South Korea’s Kyungbang Company is constructing a $40 million spinning mill in Binh Duong province. Dow recognised by Amcham for CSR initiatives in Vietnam US chemical giant Dow was just honoured Amcham Corporate Social Responsibility (CSR) Award 2015 by American Chamber of Commerce in Hanoi- a prestigious organisation representing American business community in Vietnam - for its smart CSR programmes in Vietnam. The award further highlights Dow’s contributions to the country’s sustainable growth after its 20 year of presence in the market. Dow’s smart CSR programmes not only finance but also leverage Dow’s technologies and solutions to deal with issues severely impacting lives of local underprivileged. Dow’s typical smart CSR programmes in Vietnam throughout its two decades of presence in the country include empowering more than 2,200 engineers with knowledge about cleaner production through over 30 workshops on “Training of Cleaner Production and Waste Management for Businesses in Vietnam”, and training ISO 14000 for over 800 engineers in 2015 to improve their awareness on environment protection and sustainable development. One such programme helped address the need of clean water for rural schools and hospitals through more than 20 reverse osmosis water purification systems with a capacity of up to 7,000 litres per day per system. In 2015, Dow in collaboration with People’s Aid Coordinating Committee (PACCOM) has helped over 3,000 pupils and teachers in the country to access clean, safe and certified water; collaborating with Habitat for Humanity to solve the challenge of decent housing for over 20 underprivileged families and a variety of other meaningful programmes in education and healthcare. Acting as a co-chair and one of the founding members of Vietnam Business Council for Sustainable Development (VBCSD), Dow has actively contributed to Vietnam’s sustainable development through VBCSD’s action plans and the Vietnam Corporate Sustainability Forum to help Vietnamese businesses enhance their competitiveness in a sustainable way, especially in the context that the landmark Trans-Pacific Partnership agreement negotiations were concluded in October 2015. “CSR campaigns are an inevitable part of our sustainable growth strategies in Vietnam. We have a two-decade history of being closely attached to one of the Southeast Asia fastest-moving markets and we strongly desire to further extend our contributions to the Vietnamese,” said Tomoyuki Sasama, Vietnam country manager, Dow in Vietnam. “Amcham CSR 2015 Award is a notable encouragement and pride for us as well when the year of 2015 marks the 20 year normalisation of Vietnam – US diplomatic relations and it is also the 20th anniversary of Dow in Vietnam,” Sasama added. Adam Sitkoff, executive director, Amcham in Hanoi highlighted, “Our first-ever Corporate Social Responsibility Recognition Award Programme is designed to raise awareness of CSR among AmCham members and the community, and to provide recognition to firms with best practice CSR programmes in Vietnam. We identify CSR best practices as an understanding of the linkages between business operations and society, and conducting business in a way that creates both long-term economic and social value.” Apart from long-term CSR programmes, during the past two decades, Dow has been actively supporting Vietnam’s farmers and industries to solve the challenges of clean water, clean production and energy as well as improving agricultural yield, which in turn contributes to the sustainable development of the whole society. Dow’s products are not only essential inputs to the vast majority of consumer durables segments such  as footwear, electronics, appliances, crop protection, water and waste water treatment, alternative energy sector, health and nutrition but they also see a strong presence in transportation and infrastructure materials. Vietnam, with double digit growth in recent years, is a major market for Dow in the Southeast Asian region. As a global supplier of diverse yet innovative chemical inputs, Dow is well positioned to support Vietnam to develop manufacturing and supporting industries. Ted Osius, US ambassador to Vietnam said, “We congratulate Dow on receiving the American Chamber of Commerce award for its Corporate Social Responsibility programmes, and we highly appreciate Dow’s on-going contributions to the development of Vietnam’s industries and communities and to the bilateral relationship between Vietnam and the United States.” TPP, economically and strategically significant to Vietnam Vietnamese Ambassador to the US Pham Quang Vinh has joined the Ambassadors of Canada, Peru, and Japan in a discussion in Washington on the challenges and opportunities faced by TPP signatories. The ambassadors and representatives of these four TPP member countries informed the public in each country about the trade deal and potential future challenges that may be created by its signing and implementation. The Vietnamese diplomat raised Vietnam’s concerns with the deal since the beginning of the negotiation process adding that Vietnam is determined to complete the TPP ratification and implementation as committed. Vinh said the agreement is economically and strategically essential to Vietnam and other members, hoping that Vietnam will receive technical support from others to quickly adapt to the new economic environment created by the TPP. He noted that many countries including several TPP members have recognized Vietnam as a market economy. Vietnam is proactively urging the US to do the same. AEC could revolutionize fish & seafood industry The Ministry of Industry and Trade (MoIT) recently announced high expectations for expanded exports of Vietnam seafood and other aquaculture exports to the ASEAN Economic Community (AEC) region as a result of its formation. At the 27th ASEAN Summit, November 18-22, in Malaysia, leaders of the ten ASEAN member nations signed the 2015 Kuala Lumpur Declaration officially establishing the AEC as of December 31. The 10 member nations of the AEC that form the free trade region comprise Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.  “The trade deal represents significant new revenue streams for Vietnamese fishermen and aquaculture farmers from the important free trade region with a consumer market of 600 million and an annual GDP of US$2,000 billion,” said the MoIT. “Its formation could be one of the most significant developments to date in the industry’s history.” The AEC is another step toward reshaping the nation’s economy by working with domestic and foreign businesses, foreign purchasers, and government leaders to find new trade opportunities and making Vietnam an economic hub for the region. “Growing exports within the AEC provides more revenue and job creation opportunities for the nation’s producers and agribusinesses,” said a representative for the MoIT’s International Cooperation Department. Department personnel have participated in numerous meetings with regional importers during recent trade missions – particularly as it relates to rice, seafood, aquatic products and vegetables – which historically have accounted for 30% of exports to AEC member nations. “The elimination of import tariffs and removal of barriers to trade brought about by the AEC create some competitive advantages for Vietnamese businesses that hitherto did not exist,” said the representative. The rep said the AEC presents ample opportunity for success if domestic businesses can retool their technologies with a focus on improving overall quality of their products, efficiencies in the production process and take a more innovative approach to product development. Official statistics show ASEAN member nations represented the sixth largest export market for seafood and aquatic exports the rep underscored, saying that economists at the MoIT believe it is reasonable to expect a 5-7% increase in shipments to the region in 2016. He emphasized it is important to keep in mind that globally promoting Vietnam’s agribusinesses and family-owned agricultural operations is an important component to growing the nation’s trade portfolio. Working with international marketing and development teams in Vietnam and our network of trade offices around the globe, we have been able to support the country’s small businesses and work out free trade agreements with other countries and regions comparable to the AEC trade deal. “Through October the five largest seafood and aquatic markets in descending order were the US, EU, Japan, China, and Republic of Korea,” the rep said and if we can increase sales next year by 5-7% for each market it’s easy to see how significant the impact could be. If the stars line up, for just 2016 alone, economic experts report exports of seafood and aquatic products in the top six markets could potentially expand by 30-35%. For comparison purposes in the last five years the nation’s total exports for these markets expanded 33.6%. So it is conceivable that seafood and aquatic exports in 2016 could equal or exceed the industries growth for the whole of the last five years combined if the nation’s fishermen and aquaculture farmers can grasp the opportunities. “Growing our international sales is a critical part of the government’s strategy to expand our business and develop the Made-in-Vietnam brand globally,” said the representative and we should all be appreciative of the efforts of the government to develop these new sales channels. According to statistics from the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam and Thailand remain the two leading suppliers of seafood and aquatic products for the global marketplace. VASEP General Secretary Truong Dinh Hoe said the two most important obstacles for exports in the AEC region and globally relates to food safety and hygiene matters as Vietnam’s seafood, in particular, has been tarnished by food safety violations of a few non-responsible businesses. “If the poor practices of these relatively few negligent businesses can be overcome and the image of the industry improved many opportunities will follow both in the AEC region and internationally,” said Hoe. “I cannot overemphasize the importance of ensuring food safety and hygiene to success within the AEC trade bloc as all of the advertising and marketing cannot erase the damage done by lack of attention to fundamental food safety.” Hoe said those who utterly disregard the importance of food safety are a scourge on the industry and the reputation of the nation and handicap all those honest fishers and businesses that follow the rules. With the AEC formation, VASEP believes the time is ripe for Vietnam to develop a new consortium of Vietnam based fishing and seafood companies that have the forward thinking savvy to not only lead— but revolutionize the industry. Rules of origin make it hard for garment and textile exports The Trans-Pacific Partnership and EU-Vietnam Free Trade agreements’ stiff rules of origin will make it hard for Vietnam to expand its garment, textile and footwear exports to these markets. Le Thanh Thuy deputy general director of Singaporean-Vietnamese garment and textile joint venture Norfolk Hatexco, told VIR that her company would not be able to benefit from tariff slashes under the Trans-Pacific Partnership (TPP) and the EU-Vietnam Free Trade Agreement (EVFTA), though it was exporting products to the US, one of the TPP member states, and several European nations. “It is because the company almost imports materials from Hong Kong, not from TPP and EVFTA member states,” Thuy said. Quach Thi Nhung, a South Korean garment maker KJ Vina representative, also told VIR that her company imported materials from China and Hong Kong, and products were exported to the US. This would mean that this company would not be able to enjoy tariff incentives under the TPP, she said. According to the World Bank’s latest report on the TPP’s impacts on Vietnam, “a large part of Vietnam’s current exports in the garment and textile industry would likely not comply with the TPP’s rule of origin (ROO) requirements.” Under the TPP’s “yard forward” ROO, to benefit from a 0 per cent imported tariff rate, instead of the current 15-20 per cent, all manufacturing processes including yarn spinning, knitting and dyeing must be implemented in a TPP member country. According to the report, most imported yarn and fibre used by Vietnam’s garment producers are sourced from non-TPP territories, with Taiwan (32.6 per cent), China (27 per cent), South Korea (14.6 per cent), Thailand (10.5 per cent), and Indonesia (4.1 per cent). Materials imported from TPP member states occupy 5.3 per cent. Meanwhile, under the EU-Vietnam Free Trade Agreement (EVFTA), the EU will eliminate duties within seven years for Vietnam’s textiles, apparel and footwear products, from the existing duty rate of 12.4 per cent. However, to benefit from the preferential access, this agreement’s strict ROO for garments require the use of fabrics produced in Vietnam. This would also mean that Vietnam will find it difficult to meet these EU strict ROO requirements. Still, several garment firms like Thanh Cong Textile Garment Investment Trading Company and X26 Joint Stock Company said they would benefit from the TPP and the EVFTA as they had close production chains, from fibre, cloth, yarn and buttons to finished products. “We are expecting to benefit from the TPP and the EUFTA. It is expected that our company’s garment exports to the US, Japan, Australia and Canada [which are TPP member states] will annually advance 25-30 per cent, thanks to tariff slashes,” said Nguyen Viet Thang, head of Technical Division under X26 company producing garments, footwear and wooden products. All materials are sourced from the company’s subsidiaries. Also according to the World Bank, ROO also creates opportunities for a slew of foreign firms to come to Vietnam to directly make textile, garment and footwear materials. For instance, Hong Kong’s Texhong Textile and Garment Group is building a $300 million yarn plant for the first phase in Quang Ninh province, where Hong Kong’s Black Peony is also building a $100 million jean cloth producing factory. South Korea’s Kyungbang Company is constructing a $40 million spinning mill in Binh Duong province. Korean firm to invest in Quang Nam IP South Korean firm C&N VINA Tam Anh will start construction of its first industrial park (IP) in Tam An Commune in the central province later this month, officials said. The 32,400ha Chu Lai Open EZA has 109 investment projects, of which 29 are FDI projects, with a combined registered capital of more than $1.52 billion. The South Korean firm C&N VINA Tam Anh will start construction of its first industrial park (IP) in Tam An commune in Quang Nam Province to host Korean investment flows.-VNS Photo Cong Thanh Director of Chu Lai Open Economic Zone Authority (EZA) Do Xuan Dien confirmed to Viet Nam News that the IP has been designed to encourage investment flows from Korea.              He said the Korean firm will begin the first stage of construction on 200ha, with a total investment of US$25 million for infrastructure development, and this phase will be completed in 2017. "We will create favourable conditions for investors to boost the infrastructure development process of the IP, which will host investors from 2017," Dien said. He said the EZA had started granting investment licenses to investors in April. The South Korean firm developed the 192ha Minh Hung–South Korea IP in southern Binh Phuoc Province and the first stage of the Phong Dien IP on 126ha of land in Thua Thien-Hue Province. The company has been seeking further investment in infrastructure in IPs in the Dong Nai and Long provinces. The 32,400ha Chu Lai Open EZA has 109 investment projects, of which 29 are FDI projects, with a combined registered capital of more than $1.52 billion. Sixty-six projects, worth more than $837 million, are in operation, creating 12,000 jobs for the local people. The zone has drawn $252.47 million in FDI projects. Chu Lai EZA, one of five coastal economic zones in the country, in co-operation with the Korean Textile Association, has attracted investments from the textile and tourism industries in Korea. The zone also plans to open sea routes from Ky Ha to Busan, Hong Kong and Singapore in 2016-17 and to upgrade Chu Lai Airport to allow more international flights. Da Nang and IIB ink investment projects MoU The central city and the International Investment Bank (IIB) signed a memorandum of understanding (MoU) on co-operation and boosting socio-economic development through long-term investment projects in Da Nang. Vice-Chairman of the city's people's committee Vo Duy Khuong asked the IIB to arrange loans for US$710-million worth of infrastructure projects such as water quality improvement, Lien Chieu Port construction and a feasibility study of the metro system. Chairman of the IIB Board Nikolay Kosov said he was looking at providing development loans to small and medium-sized enterprises (SMEs) and improving the city's attractiveness as an investment destination for member countries of IIB. He said IIB wanted to join infrastructure projects and provide loans to SMEs in the city. In a meeting with the city authorities in August, the bank said it would provide medium and long-term loans to small and medium-sized businesses in significant infrastructure, energy, renewable energy and industrial zones sectors, as well as construction, tourism, information technology and agriculture, besides financial leasing services. IIB would support the city's Investment and Development Fund and, with other banks, jointly sponsor loans for the city's development projects. Da Nang has 15,000 small and medium-sized enterprises, but the city has just launched its VND120-billion (US$5.7 million) Investment and Development Fund to provide preferential loans to businesses. The IIB, founded in 1970 on the basis of an intergovernmental agreement with member countries Bulgaria, Hungary, Cuba and Mongolia, besides the Russian Federation, Romania, Slovakia and the Czech Republic, as well as Viet Nam, has seen booming operations in Viet Nam since 2012. The bank, with its head office in Moscow, Russia, has funds amounting to EUR374 million (US$333.61 million). Koizumi & QH Plus in M&A deal Japan’s Koizumi will purchase 23 per cent of QH Plus on December 12 in an M&A deal, according to the VietinBank Securities Company (VietinBankSc), the consultants on the deal. The two will cooperate in developing building materials for Vietnam’s construction industry. Under the agreement QH Plus will renew its business model and supply more professional building accessories. Koizumi’s products will be sold at QH Plus’s retail network and its products will, in turn, be sold by Koizumi. CEO of VietinBankSc, Mr. Khong Phan Duc, said the cooperation between QH Plus and Koizumi will provide practical benefits for both, not only in product distribution but also in mutual support and enhancing their brand names. The cooperation is considered is an important milestone for the building accessories and materials sector in Vietnam because it targets the domestic market. Predictions are that 2016 will see a strong recovery in the building industry. QH Plus was founded in 2006 and focuses on steel trading and the manufacture of building materials and accessories in Vietnam. Its revenue 2014 was $90.63 million and is expected to be $100 million this year. The company has offices in Japan, China, Singapore, Laos, Cambodia, Malaysia, and the Philippines. Koizumi is a major Japanese company in household equipment, with nine subsidiaries and more than 100 sales offices in the country. It not only supplies products to the domestic market but also exports plastic pipes, household equipment, building accessories, and electronic accessories. Its revenue in 2014 was $1.142 billion. VietinBankSc is becoming more involved as a consultant on M&A deals in addition to its traditional consulting activities in listings and equitizations. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR