BUSINESS IN BRIEF 31/5 Inflation must be kept under five percent, demands Deputy PM Deputy Prime Minister Vuong Dinh Hue has affirmed the Government’s resolve to keep inflation at between 4-5 percent for the whole year following consecutive consumer price index (CPI) increases in the period from January to May. According to the General Statistics Office (GSO), the CPI in May rose 0.54 percent against the previous month and 2.28 percent against the same period last year. For the whole five months, the CPI has upped 1.88 percent. The agency said the CPI hike in May is the highest in the past five years, caused by the simultaneous price increase in 11 groups of goods from the previous month. Talking with the press, Deputy PM Hue said 2016 saw several factors that can push up the CPI, including rising oil prices and the upward revision of some public services such as education. The ongoing drought and saline intrusion has also pushed the prices of agricultural products higher. At a recent meeting of the Price Steering Committee, the Deputy PM urged more rapid and accurate forecast and analysis as well as closer coordination of sectors and fiscal and monetary policies in order to contain the CPI rise below five percent The Deputy PM asked relevant ministries and agencies to finalise and issue documents on price management within their realm of responsibility. For some essential goods like oil and petrol, the Deputy PM asked the Ministry of Industry and Trade to work with the Ministry of Finance to review the use of the average import tax in petrol price calculation and recommend adjustments; build a roadmap for adjusting oil and petrol prices and assess their impacts on the CPI. On electricity price, the MoIT instructed the Electricity of Vietnam group to report to the PM on production costs, selling prices, profit and loss, and the market-based management of electricity prices. The group is also requested to draw up price scenarios for 2017. Deputy PM Hue also said strict control will be imposed on medicine prices, which have increased 20.84 percent on average against 2015, and 28.26 percent against 2014. The government assigned the Ministry of Education and Training to calculate tuition fees for the 2016-2017 school year. Concerning fees for using Build-Operation-Transfer (BOT) transport works, the Deputy PM said investing in transport infrastructure in the form of Build-Operation-Transfer (BOT) or Public-Private Partnership is inevitable, but the investment must be done in a transparent manner. The government agreed with the MoT not to increase BOT charges at the moment, to ease pressure on the CPI. The State Bank of Vietnam also have to devise scenarios on running monetary policies to ensure the increase of inflation does not exceed five percent in 2016. GE leaps forward with two key deals US-based global industrial giant General Electric has secured a firmer foothold in Vietnam through the signing of two game-changing agreements during US President Barack Obama’s first official visit to the country last week. The deals with GE will aid Vietnam’s renewable energy targets and revolutionise VietJet Air’s fleet The first deal is a memorandum of understanding (MoU) between General Electric (GE) and Vietnam’s Ministry of Industry and Trade (MoIT), which will increase the country’s supply of renewable energy. GE will build upon its 20 years in Vietnam through the development of new wind farms with minimum capacities of 1,000 megawatts by 2025 – enough electricity to supply 1.8 million Vietnamese homes. Under the agreement, GE will utilise its wind power development expertise and work with local developers to identify potential projects. Furthermore, GE will manufacture wind turbine equipment and components at its $110-million Haiphong facility while collaborating with other local suppliers. “The development of renewable energy is a high priority of the Vietnamese government in order to help the nation resolve its energy challenges and meet economic and social development targets,”said Dang Huy Cuong, director general of the MoIT’s General Department of Energy. “We have a common desire to develop the renewable energy infrastructure in Vietnam through this partnership, and we highly appreciate GE’s expertise and experience in developing this crucial power resource which can mitigate the environmental impacts of climate change.” GE makes both onshore and offshore wind turbines. Its Haliade turbines, for example, will power America’s first offshore wind farm, which is due to come online later this year. GE is also connecting wind turbines to the Industrial Internet to create “digital twins” of entire wind farms and make them more efficient. “With GE’s global expertise in manufacturing and investing in wind energy, along with our local experience gained through our initial wind projects in Vietnam, we hope to continue co-operating with the Vietnamese government and its partners to develop renewable energy here effectively and sustainably,” said Pham Hong Son, chief executive officer (CEO) of GE Vietnam. GE also played a key role in the development of the Mekong Delta’s first wind farm in the southern province of Bac Lieu, invested in by Cong Ly Construction-Trade-Tourism Company. GE supplied 62 wind turbines, totalling over 99MW in power generation capacity. The first phase of this wind farm connected to the national grid in June 2013. In 2009, GE increased its investment in Vietnam by establishing a wind-turbine components manufacturing plant in the northeastern city of Haiphong. The facility has created over 600 local jobs and has exported thousands of generator systems and wind turbine components. The second deal signed last week is an order to the tune of $3 billion for 215 LEAP-1B jet engines. The engines, which use 3D-printed components and other advanced technology innovations, were developed by CFM International, a 50-50 joint venture between GE Aviation and Safran Aircraft Engines. The engines will power a brand-new fleet of 100 next-generation Boeing 737 MAX aircraft operated by Vietnam’s first privately owned airline, VietJet Air. “It has been a real privilege to work with VietJet Air on the CFM56 fleet and we are excited to bring the value of the LEAP engine to its operations,” said Jean-Paul Ebanga, president and CEO of CFM International. “In a very short time, the team has established itself as the fastest-growing airline in the region, and we believe they are just getting started.” The LEAP is the first jet engine with 3D-printed parts and components made from advanced ceramics that GE originally developed for powerful gas turbines. These components help to make the LEAP engine quieter, easier to maintain, and 15 per cent more fuel-efficient than current engines made by CFM. The first Boeing 737 MAX powered by a pair of LEAP-1B engines took its maiden flight this January. CFM also developed LEAP variants for the Airbus and COMAC airplanes. Prior to the VietJet Air deal, CFM International had received more than 10,500 orders for LEAP models from nearly 100 customers around the world, with the value of the orders topping $147 billion. BaoViet Securities wins two awards The world’s magazine on finance - Global Banking & Finance Review - has announced BaoViet Securities (BVSC) as the winner of two awards in 2016: “Best Brokerage House Vietnam” and “Best Equity House Vietnam”. The “Best Brokerage House Vietnam 2016” award recognizes BVSC’s efforts and achievements in improving the quality of its customer services, developing products and expanding business networks in order to boost transactions, and maintaining market share and position in the market. The “Best Equity House Vietnam 2016” award is presented to institutions that record many achievements and play an active role in the sectors of business finance consultancy, equitization, divestments, M&A, and others. In 2015 BVSC signed 140 new consulting contracts and successfully advised over 100 businesses. One of the most successful deals was for the IPO of the Central Transport Hospital. This was the first central hospital in Vietnam to equitize, paving the way for other major public service units. Ms. Wanda Rich, Editor of Global Banking & Finance Review, said that “BVSC has continuously improved the quality of brokerage services and their financial investments by strongly investing in science and technology and human resources. The market research reports by BVSC always bring updated and precise information resources to brokerage experts and analysts of the company. We hope BVSC will continue to offer useful solutions for investors and grow stronger in the future.” Global Banking & Finance Review, formerly Global Finance magazine, was established in the UK in 1987. The magazine specializes in providing objective, independent, and multi-dimensional information in the field of finance and banking. The prestigious global magazine has more than 2.8 million readers annually, with 61,000 subscribers on Twitter and more than 18,000 on Facebook. It founded the annual Global Banking & Finance Review Awards in 2011 to acknowledge and honor the achievements and contributions of organizations and enterprises in the banking and financial sector on a global scale. BVSC becomes the first Vietnamese securities company to receive an award. Samsung aims for more local links in chain Korean tech giant Samsung group is incorporating more Vietnamese parts and materials suppliers to link into its supply chain. Since September 2015, Samsung has been courting various domestic firms to select eligible suppliers. The number of local suppliers in their chain has surged from 32 to 63 over the past year, including 11 first-tier and 52 second-tier suppliers. The South Korean tech conglomerate is also offering training with Korean experts to help domestic suppliers raise their productivity and meet global standards, thus enabling it to join its supply chain. These actions reflect Samsung’s commitment to improving the rate of localisation as well as its plan to turn the country into its main production base. Han Myoungsup, general director of Samsung Vietnam, said that Samsung hopes to co-operate with domestic suppliers that demonstrate an elevated performance after their training with Korean experts. Most recently, three local firms have qualified as suppliers for the Samsung Electronics Ho Chi Minh City Complex (SEHC) in the Saigon High-Tech Park (SHTP): Ngan Ha Printing Packaging Co. Ltd, Phuoc Thanh Plastic Co. Ltd, and Minh Dat Precision Mold Co. Ltd. Chau Phuoc, chairman of Phuoc Thanh, said that “As a first-tier supplier for SEHC, Phuoc Thanh is investing $71 million into a hi-tech research, application, and production plant in SHTP with an annual minimum output of 20 million products. The 5-hectare facility is slated to begin operation in June, and supply 30 per cent of the demand for hi-tech and high-quality plastics at the complex. “We decided to ramp up our investment as Samsung has agreed to support us in improving our production capabilities, minimising our costs, and ensuring quality. Samsung has recently dispatched Korean experts to aid our business performance,” he added. Similarly, Chu Manh Cuong, director of Ngan Ha printing packaging noted that “We have been supplying Samsung Vina for some years now. When the group expanded their complex in SHTP, we made plans to increase our business activities. Following the training offered by Samsung, we have recorded a higher performance at our facility”. According to Lee Sangsu, SEHC’s president, these firms have made a significant improvement since the upgrade. However, it will mean nothing if local businesses fail to keep up the pace in terms of product quality, delivery time, and pricing. In fact, most Vietnamese suppliers to Samsung partake in low value-added segments like printing and packaging because they do not have much experience with multinational manufacturers, and they suffer as a result of their deficiency in marketing, capital, and technology. With a total investment of $7.5 billion, Samsung Electronics Vietnam’s projects in the northern provinces of Thai Nguyen and Bac Ninh are scheduled to make 200 million smartphones in 2016. Meanwhile, the $2-billion SEHC facility will focus on research and development in addition to making high-end television sets. The group is committed to achieve a localisation rate of 35 per cent by 2020. Ho Chi Minh City firm mortgages sold condo project, angering flat owners A realty developer in Ho Chi Minh City has mortgaged and defaulted on an entire condo project in which 600 apartment buyers have already moved. Tamexim is now on the verge of having the project, The Harmona Apartment in Tan Binh District, foreclosed by the creditor, a BIDV branch, next month. Apartment owners are worried that they may lose their homes, even though they have nothing to do with the debt issue between the developer and the bank. The Harmona is located on a 9,100 square meter land plot on Truong Cong Dinh Street, and is a joint venture between Tamexim and Thanh Nien Corp. In 2011, Tamexim mortgaged the land using right of the project, as well as the Harmona’s three apartment blocks with more than 600 units, for Thanh Nien Corp to borrow money from the Bac Saigon (North Saigon) branch of BIDV. The creditor said Thanh Nien Corp has repeatedly failed to clear their debt, forcing them to foreclose on the mortgaged assets. On May 24, BIDV Bac Saigon sent a request to Tamexim asking the company to prepare to hand over their collateralized assets by June 9 in order to resolve the unpaid debt. The creditor also requested that the assets be returned “in the original form in which no flat owner has moved in,” angering The Harmona residents. One of the owners, Tung, said buyers of the condo project have nothing to do with the loans of the developer, so they are “under no obligation to move out for the bank to foreclose on the apartments.” “The debt issue must be solved by the two parties involved,” he added. “We have signed contracts and settled payment with the developer, so they could not take back our apartments.” The Harmona residents have yet to receive the house owner’s certificate for their apartments, three years after moving in. The condo project broke ground in the fourth quarter of 2009 and buyers began moving in around the second and third quarters of 2013. Nguyen Van Liem, chairman of Thanh Nien Corp, admitted to Tuoi Tre(Youth) newspaper that the company has failed to clear its debt due to “objective reasons.” But Liem promised that the payment will be settled no later than mid-June. “We have a very good credit relation with the bank. We were once allowed to borrow up to VND1.2 trillion [US$53.57 million],” he said. For The Harmona project, Thanh Nien Corp took out a VND500-600 billion ($22.32 million-26.79 million) loan and still owes more than VND240 billion ($10.71 million), Liem admitted. “Before the foreclosure announcement came, we had expected to clear the debt by the end of this month.” On May 26, Thanh Nien Corp reached an agreement with the lender to delay the debt clearance until June 15, according to an announcement released the same day by Tamexim. BIDV Bac Saigon said in a separate document that it would unwind the foreclosure once the debt is cleared. Liem said Thanh Nien Corp will try to settle the debt issue, take back the property, and issue the house’s owner certificates to its residents. “We are completing the certificate issuing process, and may start to grant the documents in August, if the foreclosure is undone,” he said. Nguyen Huy Hoang, deputy general director of Tamexim, also apologized to the apartment owners at The Harmona. Vietnamese chocolate wins favor in Japan The Vietnamese chocolate brand Marou has doubled its revenue in Japan compared to the previous year for the last three years in succession, despite being eight-times more expensive than Japanese chocolate. The International Cocoa Organization (ICO) said that the majority of chocolate producers use Forastero cocoa, which is of medium quality but grows easily. An expert from Euromonitor, meanwhile, said the taste in chocolate among high-income earners is changing as they are willing to pay more for good quality. In Japan, despite a declining population, chocolate sales increased about 7 per cent in 2015, according to Euromonitor, as Japanese people believe it is good for the health. Chairman of US chocolate company Guittard, Mr. David Parkman, said that most consumers is Asia used to think that all chocolate was the same but tastes have now become more discerning, with people realizing that cocoa from different regions has a different flavor. He predicted that, on average, cocoa demand will increase about 3 per cent each year thanks to strong consumption in Asia, which remains low compared to globally. Chocolate makers therefore have a lot of opportunities to develop in the region. Marou has five different types of chocolate, named after five provinces in Vietnam: Tien Giang, Dong Nai, Lam Dong, Ba Ria Vung Tau, and Ben Tre. Vietnam aims for 4-5 percent inflation At the meeting with Price Steering Board lately, Deputy Prime Minister Vuong Dinh Hue ordered ministries to plan more tightened fiscal and monetary policies to help the government and the PM control inflation rate under 5 percent which the National Assembly targeted. The Deputy PM said that all ministries and responsible agencies must complete documents relating to price management. Particularly, the Ministry of Industry and Trade must amend decisions issued by the PM about retailed price of electricity. The Ministry of Finance must adjust a government’s decree  on the Price Law. Meanwhile the Ministry of Health must soon issue documents  guiding medicine forbidding in accordance with the Forbidding Law. For the price of essential items such as petroleum, Mr. Hue required the Ministry of Industry and Trade in coordination with the Ministry of Finance to re-assess the tax on export and submit its reports to the government for adjustment of petrol prices as well as work out a road map for the adjustment and reports of its effects on e country’s consumer price index (CPI) The Ministry of Industry and Trade should instruct petroleum enterprises to control the cost of wastage and to apply advanced technologies. The Ministry should increase information to people and enterprises in ruling petrol prices. Concerning to the electricity price, the Ministry should guide the  Vietnam Electricity Corporation to report costs and  selling prices, profit and loss status in order to regulate  electricity prices during 2016 as per market’s demand and estimated price for 2017. The Deputy PM said that the government will tighten control over drug prices because as per statistics, the prices of medicine and medical services increased by 16.03 percent compared to the same period last year; of which drug prices showed a leap of 20. 84 percent compared to 2015 and hiked by 28.26 percent compared to 2014. Accordingly the Ministry of Finance must liaise with the Ministry of Health to submit a solution for concentrating drug forbidding and a solution for  forbidding drug of healthcare  insurance programs to reduce drug prices. The government agreed with the Ministry of Transport not to increase cost of Build-Operate - Transfer construction works and to relax price surge. In addition, the State Bank of Vietnam should work out a monetary policy to control inflation rate fluctuating from 4 to 5 percent in 2016. Last week the  General Statistic Office of Vietnam announced CPI in May increased by 0.54 percent compared to April and leap by 2.28 percent compared to the same period last year. According to the Office, CPI in May climbed to one-month- high within recent five years. Additionally, prices of 11 groups of commodities went up in May compared to April. So inflation is the most pressure in controlling prices. Lending in foreign currency to exporting companies resumed The State Bank of Vietnam has issued a new circular allowing loans in foreign currency to be made to select exporting companies from June 1. Under Circular 07/2016/TT-NHNN, credit institutions and branches of foreign banks can resume providing short-term loans in foreign currency to exporting companies which have enough foreign money from their export activities to pay off. According to the central bank, the circular, which is effective until December 31, 2016, is designed to stimulate the economy, which saw a slowdown in the first months of the year compared with the same period of 2015. Vietnam’s economy was also hurt by severe drought in the south central and Central Highlands regions, drought and saltwater intrusion in the Mekong Delta, as well as fish die-off in a number of central provinces, which affected the fishing and tourism industries. The circular is in line with the government’s efforts to remove obstacles to enterprises in order to achieve the growth rate of 6.7%. The policy adjustment was made as the difficulties that arose had not been anticipated in the foreign currency policy at the end of 2015. Taiwan auto parts firms seek to enter Vietnam Saigon International Autotech & Accessories Show 2016 kicked off in HCMC’s District 7 on May 26, with an upsurge in the presence of Taiwanese auto parts companies with plans to enter the domestic market. According to the organizers, the four-day expo at the Saigon Exhibition and Convention Center (SECC) is attended by around 700 enterprises, up 30% against last year’s event. Foreign exhibitors make up 70% of the total and Taiwanese auto parts firms number more than 50. Eugene Hsiao, chairman of the Taipei County Auto Parts Association, said Vietnam’s auto market has been expanding, with sales in 2015 totaling 245,000 vehicles. This is why many Taiwanese companies have put their names down to join the 1,000-booth expo to explore business opportunities. In addition, a number of Taiwanese companies have come to gauge the investment environment before deciding to set up shop in this market. According to Hsiao, many Taiwanese companies have invested in production facilities in Vietnam but mainly outsourced products for export. Companies in the field are eyeing the Vietnamese market and other ASEAN countries with a combined population of over 600 million consumers. If Taiwanese auto parts firms invest in Vietnam, they can turn out products for domestic consumption and export to other regional countries with low tariffs, Hsiao said. He added that Vietnam has advantages in labor costs and incentives for foreign investments. The major advantage of Taiwan’s auto industry is the large-scale supply chain that helps minimize production costs, he noted. Taiwan currently has around 2,800 factories producing auto parts. Statistics of the vehicle manufacturing association of Taiwan showed revenue of auto parts reached US$6.8 billion last year. HoREA seeks guidance for home loan package disbursements The HCMC Real Estate Association (HoREA) has proposed the State Bank of Vietnam (SBV) provide detailed guidelines for disbursements of the low-interest home loan package worth VND30 trillion (US$1.34 billion). On March 30, the Government issued a resolution approving all the loans signed under the package to be disbursed until they are fully completed instead of June 1 as initially scheduled. However, the central bank has not issued guidelines for this. HoREA said as reported by local media a number of customers having loan contracts with eligible commercial banks of the Government’s home loan package have been asked by brokers to sign falsified papers on apartment handovers in order to have 95% of the total sum in their loan contracts disbursed. This would cause damage to both borrowers and lenders, and investors may use these disbursements for other purposes before they hand over homes to buyers. HoREA warned that borrowers would have to pay more interest due to the early disbursement. Therefore, HoREA stressed that the central bank’s guidelines will help commercial banks disburse loans with preferential interest for customers in line with their contracts and protect borrowers. On March 28, the SBV told commercial banks to stop signing new contracts with beneficiaries of the home loan package from March 31 as the loan pledges had exceeded VND30 trillion. By March 10, banks had pledged loans totaling around VND30.12 trillion (US$1.35 billion) for 46,246 customers under the package, and over VND21.32 trillion, or 71% of the total, had been disbursed. In HCMC, banks had committed VND7.52 trillion (US$336 million) for 9,831 customers as of March 31, accounting for 21.25% of the total number of customers. Of the amount, VND5.98 trillion was lent to 9,823 borrowers and about VND5.36 trillion (US$239.6 million) went to 8,936 customers, including VND4.24 trillion to 8,829 individuals. BIDV seeks Japan partners to promote tourism and agriculture cooperation The Bank for Investment and Development of Vietnam (BIDV) looks to work with Japan’s localities, organizations, enterprises and banks to help promote tourism and high-tech farming cooperation between the two countries. BIDV chairman Tran Bac Ha raised the point at a meeting with Furuta Hajime, governor of Japan’s Gifu Prefecture in Hanoi on Wednesday, according to the Vietnam News Agency. In the past, BIDV worked with the Japanese prefecture in multiple sectors and served as a bridge between Gifu and the Vietnamese provinces of Nghe An and Binh Dinh. The bank often organizes conferences for Vietnamese firms to explore investment opportunities in Japan. In July, it will coordinate with the Vietnamese embassy in Japan and the Vietnam National Administration of Tourism (VNAT) to hold a forum on tourism and investment ties between central Vietnam and Japan. BIDV has partnered with 66 leading Japanese banks and around 10 Japanese experts are working at the local bank. Ha said BIDV plans to spend US$750,000 on promotion and marketing activities and boosting economic corporation between Vietnam and Japan. Furuta told the meeting that Gifu would prioritize partnership with Vietnam in supporting industries, high-tech agriculture and tourism as these are the strengths of the prefecture. The governor proposed Vietnam invest more in processing and transportation of agricultural products to ensure goods quality. Tourism between Japan and Vietnam has grown strongly in recent years. The Northeast Asian country is now Vietnam’s third biggest visitor-generating market and many Vietnamese tourists have traveled to Japan, showed a BIDV survey. Japan is also interested in Vietnam’s tourism market, Furuta said. To develop tourism, Vietnam needs solutions to improve infrastructure and skills of employees in the sector to help keep foreign tourists stay longer. Last year, two-way trade between Vietnam and Japan totaled US$29 billion. Japanese firms have registered US$38.5 billion for 2,000 projects in Vietnam. Japan has pledged to provide US$20 billion in official development assistance (ODA) for Vietnam. Japan’s ODA has contributed to improving human resources, transport infrastructure, agriculture, education, and environment in Vietnam.    Bibica sets prudent business targets Mounting sugar prices and competition in the confectionery sector have forced Bibica Corporation to take cautious steps in setting this year’s business targets, including that for profit. At a shareholder meeting on Wednesday, many shareholders said the respective revenue and pre-tax profit targets of VND1.25 trillion (up 6.7% against 2014) and VND82.1 billion (down 22.1%) are low compared to the company’s capability, local media reported. Responding to shareholders’ concern, general director of Bibica Truong Phu Chien said the targets are based on material prices and market fluctuations. In particular, the year’s profit is projected to fall as unfavorable weather conditions could affect incomes of consumers and confectionery sales in rural areas. Costs of fuels and some materials are forecast to rise, thus affecting production costs. Besides, competition has intensified given the influx of imported products as a result of Vietnam’s stronger international integration. Bibica has enough sugar in stock for use until the end of the third quarter at a price of below VND15,000, still higher than last year. The price is projected to keep fluctuating and might climb to VND18,000-20,000 per kilogram, making it hard to translate the business targets of Bibica into reality. Minimum wages are also a matter of concern. Bibica will adjust the wage coefficient, resulting in its payroll going up 12% to over VND220 billion.   Bibica aims for a market share of 8.6% this year and 14% in 2018. Shareholders agreed on a dividend of 12%, the same as last year. Bibica plans to spend VND379 billion on investments this year, including in two ongoing projects. The shareholder meeting also approved adding Kim Jun Yeon and Nguyen Khac Hai to the board. Kim replaces Jeong Hoon Cho, who represented Lotte’s stake, while Hai representing PAN Food replaces Nguyen Ngoc Hoa. Lotte now holds 6.7 million shares of Bibica (44% of its chartered capital) while  PAN Food owns 6.15 million shares (42.2%). Last year, Bibica posted net revenue of over VND1.17 trillion and after-tax profit of VND85.8 billion, up 3.7% and 48.5% against 2014 respectively. The company’s payroll has risen after five years, with monthly pay averaging VND9.7 million per person last year. Foreign currency borrowing On the same day, the SBV issued Circular 07/2016/TT-NHNN to supplement and amend some articles of Circular 24/2015/TT-NHNN on providing foreign currency loans by credit institutions and foreign bank branches. Under the new regulations, from June 1, companies who have demands for short-term loans in foreign currency can borrow from banks to satisfy their short-term capital needs. Borrowers must commit to have sufficient foreign currency revenue from exports to repay the loans. After getting the loans, borrowers must immediately sell the amount of foreign currency to the lending institutions under the spot foreign exchange trading method, except for the case that the foreign currency will be used to make payments. This decision will take effect until December 31, this year. According to the old regulations, commercial banks are not allowed to provide lending in foreign currency to exporters from 31 March this year. Banking expert Nguyen Tri Hieu said that the decision would help enterprises, especially small- and medium-sized ones, to reduce costs for capital by getting loans in foreign currency at low interest rates, thereby making exports more competitive. However, he warned that the policy would raise demand of exporters for foreign currency, thus have effects on the stability of the foreign exchange rate in the near future. Therefore, companies should take careful consideration related to foreign exchange rate. He suggested that the SBV allow commercial banks to increase the interest rates for US dollar deposits to raise the banks' liquidity. New SBV circular announced Long-awaited amendments to Circular 36/2014/TT-NHNN regulating prudential ratios for the operations of credit institutions and foreign bank branches were officially issued on Friday afternoon, surprising many real estate insiders. Accordingly, under a new circular issued by the State Bank of Viet Nam, the risk index of receivable lending for real estate and securities would be raised from 150 per cent (the lowest level) as stipulated in Circular No 36 to only 200 per cent. This is lower than the cap of 250 per cent as proposed earlier by the SBV, which has made property investors worry about capital shortage. The increase will come into effect on January 1, 2017. The new Circular 06/2016/TT-NHNN also specifies a roadmap for the maximum ratio of short-term funds used for medium and long term loans to be reduced from 60 per cent to 40 per cent. Under the newly issued decision, the 60 per cent ratio will be kept until December 31 this year. The ratio will be lowered to 50 per cent from January 1, 2017 to December 31, 2017. It will drop to 40 per cent from the beginning of 2018. Nguyen Duc Do, deputy director of the Financial Economic Institute at the Ministry of Finance's Finance Academy, said that the SBV's choice to take such a "soft" measure was completely reasonable when taking into account the economy's less-than-expected pace of recovery. If loans to the real estate sector were tightened too fast, it would have negative impacts on the property market in particular and economic growth in general, he said. To some extent, facilitating the recovery of the real estate market was a measure to deal with the bad debts of commercial banks, Do added. Currently, the amount of long-term deposits was less than the demand for long-term loans, thus a sudden and strong decrease in the ratio of short-term funds used for medium and long term loans would cause an increase in lending interest rates and a decrease in credit growth. Do hailed the new policy as a step-by-step adjustment to avoid shocks for the economy. "I hope that the policy, if accompanied with a stabilisation of dong which helps raise the trust in the currency, will increase the amount of long-term deposits, make commercial banks able to satisfy loan demands, and ease interest rate pressure." Vissan aims for top place The Viet Nam Meat Industries Company (Vissan), a subsidiary of the Saigon Trading Group (Satra), held its first shareholders meeting in HCM City on May 28. Business plans were approved for the remaining months of the year as were tentative strategies for 2017-20. The company invest more in processing technologies to improve production capacity, come up with new products and synchronise its equipment with HACCAP standards. The company plans to build a food-processing cluster in Long An Province, high-quality piglet and pig farms, an animal feed plant and others, which would enable it to create a safe food chain called 3 F (feed-farm-food), Van Duc Muoi, the company's general director, said. It would expand its national distribution system and gradually enter into e-commerce, he said. After acquiring new technologies and building high-quality pig farms, the company would focus on exporting to Asian countries and the US, Australia and Japan, he said. The company has set itself a target of becoming the country's largest food producer, processor and distributor, creating a food chain with increasingly diverse products that meets hygiene and food safety standards in both the domestic and export markets in the next 10 years. Vissan has a chartered capital of over VND809 billion (US$36.27 million), 67.76 per cent of which is owned by the State, 14 per cent by a strategic investor and the rest by the public. Vissan targets revenues of VND3.99 trillion ($179.2 million) this year, rising to VND5.25 trillion ($235.4 million) in 2020. While it expects a net profit of VND99.17 billion ($4.44 million) this year, it will be dragged down to VND52.2 billion ($2.34 million) in 2020 due to interest payments and depreciation as the processing cluster in Long An begins operating in 2019, according to Muoi. At the meeting, the shareholders elected a new five-member executive board and a three-member supervisory board. Nguyen Phuc Khoa, deputy general director of Satra, was elected chairman. Canadian enterprises eye investment opportunities in HCM City A delegation of leading enterprises from Richmond, a coastal city in western Canada, led by Councillor Chak Au, visited HCM City on May 27 to seek cooperation opportunities. Chak Au said being one of Canada’s economic centres, Richmond is strong in high-tech industries with more than 100 enterprises operating in those fields. He said the city’s companies want to seek partners in commerce, hi-tech agriculture, education and training in HCM City, which has a dynamic and favourable environment for investment. Tran Vinh Tuyen, Vice Chairman of HCM City People’s Committee, said the city always creates favourable conditions for foreign firms which want to invest in the city. Noting that Richmond’s strong sectors match the city’s development priorities toward a green and modern city, the official expressed his hope that businesses from the two countries can reach specific cooperation agreements as soon as possible. Singaporean firm to invest in innovative park in HCM City The Sembcorp Development company from Singapore has expressed intention to invest in a Vietnam-Singapore Innovative Park in Ho Chi Minh City. The firm’s general director Kelvin Teo discussed the plan with Chairman of HCM City’s People’s Committee Nguyen Thanh Phong during a working session on May 27. The general director said the park will need about 50-100 hectares of land near the city’s centre, adding that it differs from other industrial zones in that it will have a commercial centre, research facilities and residential quarters to ensure quality living conditions for scientists and experts. Once operational, it will attract investors and interdisciplinary experts from all over the world to develop new products, he said. According to Chairman Nguyen Thanh Phong, the HCM City Hi-tech Park has sufficient conditions to meet Sembcorp Development’s requirements for the project. He assigned the hi-tech park’s management board and relevant agencies to work with the Singaporean firm on land use procedures. The city leader also expressed his hope that the firm will invest more in the development of renewable, wind and solar energies in the city. So far, Sembcorp Development has poured 8.5 billion USD into 7 projects in Vietnam, creating about 160,000 jobs. Dong Nai company exports cocoa to RoK, Japan A company in Dinh Quan district, in the southern province of Dong Nai, has recently exported 12 tonnes of cocoa mass to the Republic of Korea and one ton of chocolate made from Vietnamese-grown cocoa to Japan. From June, the Trong Duc cocoa company will ship one batch each per month. This is the first time the company has exported products made from domestically-produced cocoa to developed countries. Dang Tuong Khanh, Director of the company, said it will continue investing more in machinery and research to diversify cocoa-derived products and expand its markets to Asia and Europe. Last year, the firm signed contracts with 235 farming households in Dong Nai, Binh Thuan and Lam Dong provinces to buy their fresh cocoa fruit at prices of 5,700 – 6,000 VND per kg – 1,000 VND above the market level; while assisting farmers in seedlings, techniques and links with fertiliser providers to offer deferred payment. So far, half of the 235 households have been licensed with UTZ certificates. Between now and later this year, the company plans to contract a further 400ha of cocoa cultivation and ensures that all cocoa farming households meet UTZ requirements. VN finds difficulties enforcing environment protection policy: experts Vietnam will face challenges in implementing policies and laws on environmental protection, especially in industries seeing strong growth, said Nick Thorpe from the People and Nature Reconciliation (PanNature) centre. Speaking at a seminar themed “Free trade: Investment movement and environmental issue in Vietnam” held by PanNature in Hanoi on May 27, Nick Thorpe highlighted that Vietnam will meet difficulties in abiding by environmental standards regulated in the Trans-Pacific Partnership (TPP) agreement, and those concerning land compensation at the local level. There are loopholes in Vietnam’s policies on environmental management for businesses, he stressed. Le Dang Doanh, former Director of the Central Institute for Economic Management, said by joining free trade agreements (FTAs), Vietnam has to commit to ensuring regulations related to indicators on ozone-depleting substances , pollution at sea, transparent cooperation in protecting the environment, and reduction of fishing activities detrimental to fisheries resources. Doanh suggested building a relevant regulation system, adding that it is necessary to enhance supervision of environmental protection for foreign-invested enterprises. FDI businesses’ operation ought to obey regulations on management of waste water, dust, and noise – right from the first phases of design and technology selection, to construction and operation, he noted. According to Do Thanh Bai from the Chemical Society of Vietnam, industries that will most benefit from TPP such as textiles, footwear, and electronics are the most prejudicial sectors to the environment because they use many toxic and persistent chemicals. Bai underlined the need to carefully select investors, aiming to seek those using environmental friendly technologies. Vietnam has joined and negotiated 15 FTAs so far, with the TPP officially signed in October last year after five years of negotiation. The trade pact is said to give Vietnam the chance to upgrade its investment and business environment, attract foreign investment, speed up its restructuring process and shift its growth model. Southern localities urged to diversify trade promotion activities Southern localities should diversify both export markets and products, while enhancing goods’ quality and models to increase competitiveness amidst fierce competition when Vietnam joins the Trans Pacific Partnership (TPP) and the ASEAN Economic Community (AEC), said a trade official. It is crucial to pay more attention to the domestic market, especially rural areas, and foster the link between the network of counsellors abroad and trade associations and businesses at home, said Industry and Trade (MoIT) Deputy Minister Do Thang Hai at meeting to discuss solutions to strengthen trade promotion programmes for southern localities in An Giang on May 27. Hai held that the TPP and AEC will also open up new prospects for Vietnam ’s imports and exports. He urged industry and trade sectors of regional localities to continue stepping up measures to ensure stable markets for agricultural products and updating economic integration information to the business community and producers. The ministry and its Trade Promotion Agency will also implement action programmes to meet businesses’ demands and remove obstacles for them, he said, noting that the most important solution is improving product quality. Meanwhile, Bui Huy Son, head of the Trade Promotion Agency revealed that so far this year, the agency has successfully introduced about 100 foreign firms to southern localities to seek partnership opportunities. At the same time, it also arranged meetings between trade promotion centres, trade associations, 500 regional enterprises and foreign businesses, while intensifying e-commerce promotional channels to introduce prestigious Vietnamese firms to the world. So far, southern localities have organised more than 200 trade promotion programmes at a total cost of 15.2 billion VND (679,136 USD). They have been supported to join a project to enhance competitiveness for small and medium-sized enterprises through local trade promotion centres. The Trade Promotion Agency has also coordinated with the Netherlands’ Centre for the Promotion of Imports through the MUTRAP-EU project to build trademark strategies for the food industry of Vietnam and southern localities in particular, Son added. Hanoi names 77 companies with overdue tax payments The Hanoi Customs Department has publicised a list of 77 businesses with late tax payments amounting to approximately 72.5 billion VND (3.23 million USD). The companies in the “blacklist” owe tax payments that are at least 90 days in arrears from their due dates. The list is topped by Toan Thang Industry and Trade Co. Ltd, which owes over 20.7 billion VND (nearly 924.490 USD) in taxes. The firm is followed by Vietnam General Import-export and Technological Transfer Joint Stock Company and Huong Thanh Co. Ltd, each owing over 7 billion VND (312,760 USD). The listed firms also include the Tan Viet Asia Co. Ltd, which has yet to pay only 135,000 VND (about 6 USD) in taxes. The Hanoi Customs Department said overdue tax payments by the end of April amounted to 561 billion VND (25.06 million USD), owed by 520 enterprises headquartered in the capital city. Eight businesses with late payments have been relieved from tax debt or late payment charges. Malaysia enacts tax on rolled coil Malaysia has imposed anti-dumping taxes ranging between 3.06 per cent and 23.78 per cent on cold rolled coil imported from Viet Nam, mainland China and South Korea. The Viet Nam Competition Authority under the Ministry of Industry and Trade announced on Wednesday that the Ministry of International Trade and Industry of Malaysia (MITI) issued the final conclusion of its anti-dumping investigations against imports of cold rolled coil imported from the countries. Accordingly, Viet Nam will be levied an anti-dumping tax between 3.06 per cent and 13.68 per cent from Tuesday. The taxes would be applicable for five years. The sanction concludes an anti-dumping review aimed at steel products imported from the three countries that was initiated on August 27, 2015, based on the petition filed by FIW Steel Sdn. Bhd., on behalf of the domestic industry producing Pre-Painted/Painted or Colour Coated Steel Coils (PPCCSC). Products under investigation included cold rolled coils of alloy and non-alloy steel with thickness between 0.2mm and 2.6mm and width between 700mm and 1300 mm. The products have HS code of 7209.15 000 7209.16 000 7209.17 000 7209.18 290 7209.18 900 and 7225.50 000. MITI said the imported products hurt the domestic industry in Malaysia which was producing similar products. This has been the second product exported from Viet Nam to Malaysia hit by anti-dumping taxes. Vietnamese pre-painted, painted or colour coated steel coils were also slapped with the tax in October. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR