BUSINESS IN BRIEF 13/6 EVN works to ensure electricity for dry season Electricity of Vietnam (EVN) has prepared a number of measures to ensure electricity for the dry season, especially in the north, as heat is raging through. According to the group, the total installed capacity of the national power system is 38,300 MW, while the maximum load capacity is close to 26,600 MW. This means the system has around 20-30 percent of standby electricity to meet the anticipated surging demand. The power consumption in June is estimated at 16.2 billion kWh. However, as of May 9, the total amount of water in hydropower reservoirs could generate only 4.76 billion kWh of electricity, a shortfall from the normal rising water level of 9.75 billion kWh. The low water level in reservoirs of central and southern regions could generate a mere 2.21 billion kWh, or 86 percent of the level of the previous year’s same period. EVN Deputy General Director Ngo Son Hai attributed the situation to the effects of El Nino, noting that most of the reservoirs contain only 80 percent of their designed capacity. Given this, EVN plans to increase the load capacity by 11 percent as approved by the Ministry of Industry and Trade (MoIT) and possibly even higher at 13-14 percent, he said. He raised the fact that in the first four months of 2016, the national power system generated over 56 billion kWh, a year-on-year increase of 13.91 percent. The EVN had to take full use of gas turbines and coal-fired thermal power plants in the southern region to cater for local demand. The Ministry of Agriculture and Rural Development asked EVN to coordinate with drought-hit localities to regulate the flow of water from reservoirs to ensure sufficient water for production and daily activities, particularly in the lower part of rivers, he added. Deputy head of the MoIT’s Electricity Regulatory Authority Dinh The Phuc said EVN has had to utilise oil – an expensive natural resource to generate 650 million kWh of electricity since late 2015. EVN has coordinated with the Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin) to ensure adequate provision of coal and gas for the smooth and stable operation of the two groups’ power stations, he added. EVN’s National Power Transmission Corporation (NPT) transmitted a large amount of electricity from the north to the central and southern regions over the recent prolonged drought. It also put into operation a number of facilities to meet the power demand in the south, including the 220kV Vung Ang – Ba Don – Dong Hoi power line and the 500kV Pleiku 2-Cau Bong power lines. Deputy Director of EVN NPT Nguyen Tuan Tung said the operation of the 220kV Xekaman 1- Pleiku 2 power line between Vietnam and Laos is expected to supplement 300 MW of electricity for the southern part of Vietnam. The corporation is accelerating the implementation of other projects, especially the 500kV Duyen Hai – My Tho power line, he added. As the dry season is peaking in the north, EVN is preparing to increase the load capacity by 20 percent – the highest posssible level – in case of a worsening situation. The group said it has upgraded coal-fired thermal power and gas turbine plants to supply electricity for locals in the coming months, as well as closely coordinating with PetroVietnam to map out plans to repair the PM3 Ca Mau and Nam Con Son gas pipelines to provide gas for power generation in the south. According to the group, during May and June, the country could generate nearly 13.8 billion kWh of electricity from coal-fueled thermal plants, 9.39 billion kWh from hydropower, 8.6 billion kWh from gas turbines, and 481 million kWh from oil. The power transmission from the north to the central region could reach over 2.2 billion kWh while that from the central region to the south could be nearly 2 billion kWh. This means the national power system have sufficient power sources to satisfy local demand, EVN Deputy General Director Hai confirmed. Vietnam-US trade links look to expand   Vietnam-US trade turnover is likely to grow stronger thanks to a series of measures to promote economic cooperation discussed and agreed by leaders of the two countries, a Vietnamese economist has said. According Nguyen Duy Khien, Director of the America Market Department under the Ministry of Industry and Trade, the two countries committed to work closely to solve arising issues in economic cooperation, in the spirit of creating optimal conditions for their enterprises and strictly abiding by international regulations and commitments, thus furthering the promoting of bilateral economic-trade links. It is realiable to affirm that Vietnam-US trade turnover will remain in strong growth over the next ten years, he said. With its advantages, Vietnam is focusing on seven key groups of goods to export to the US market, including textiles and garment, footwear, wood and timber products, computers, electronics and spare parts, farm and aquatic products, telephones and spare parts. In a recent reception for US Trade Representative Michael Froman, Minister of Industry and Trade Tran Tuan Anh highlighted the strong development in the Vietnam-US relations in many fields, especially in economics and trade. According to the America Market Department, the US was Vietnam’s second largest trade partner in the first four months of this year, with export-import turnover hitting 13.92 billion USD, representing a 13.5 percent year-on-year increase. Vietnam posted a trade surplus of 8.98 billion USD with the US in the period, up 1.48 billion USD compared to the same period last year. Vietnam’s participation in new the generation free trade agreements (FTAs), especially the Trans-Pacific Partnership (TPP) Agreement, will bring great advantages to the country’s exports, especially farm produce. The US side is committed to giving necessary support to Vietnam, enabling the Southeast Asian country to enforce the multilateral FTA, Khien said. TPP will be a foundation to further foster trade growth among its member nations, Khien said, noting that Vietnam should adjust its export structure and join global supply chains early, towards increasing value for its goods. Vietnam’s export value to the US is forecast to surge 20 percent when the TPP officially takes effect. The US Chamber of Commerce predicts that garment exports from Vietnam to the US can reach 22 billion USD by 2020. To promote exports to the US market, Vietnamese enterprises have been advised to devise and take specific business strategies based on accurately analysing and evaluating their strengths and weaknesses, and taking advantage of opportunities. Lam Dong serves up hi-tech agricultural model With its advantages in land and climate conditions, the Central Highlands province of Lam Dong is leading the country in developing hi-tech agricultural production in the context of increasing demand for quality agri-products. Among 21 recognised hi-tech agricultural companies in the country, five are based in Lam Dong. Vice Chairman of the provincial People’s Committee Pham S said the province has created Vietnam’s largest dedicated areas for growing vegetables, flower, tea and the second largest dedicated area for coffee. The province has more than 43,000 hectares of production using high technology, equal to 16.4 percent of cultivable land. Of which, 11,900 hectares are under vegetables, 2,400 ha under flowers, 11,300 ha under coffee, 2,500 hectares under tea and 300 hectares for specialty trees. The province’s high-tech agricultural exports make up 30 percent of the sector’s total production value and 80 percent of the province’s total export value. Pham S said the province’s goal is to become a leading province in terms of high-tech agriculture in Southeast Asia. Besides Lam Dong, hi-tech agricultural production has spread to many provinces and cities. However, Nguyen The Nhuan, Director of the Research Centre for Potatoes, Vegetables and Flowers under the Southern Agricultural Science and Technology Institute, noted the need to conduct research into the specific conditions of each region in order to develop hi-tech agricultural production models effectively. “In order to apply high technology in agriculture, there needs simultaneous improvement in technological factors across the supply chain, production and marketing,” said Nhuan. According to Nguyen Van Bo, former director of the Vietnam Agriculture Science Institute, the growth of agricultural production will mainly depend on the policy on developing enterprises and technologies. It is necessary to have incentive policies for investors in agriculture, he said, suggesting those related to land-leasing, land acquisition, tax, capital, risk insurance, and human resource training. Nghe An serves over 1 million tourists in five months The central province of Nghe An has welcomed more than 1 million tourists since the beginning of this year, earning over 675.6 billion VND (30.7 million USD) in revenue. The local tourism sector is working hard to market tours and connect with partners at home and abroad, making thorough preparations to launch Vinh-Bangkok direct flights on June 8, thereby facilitating trade and travel between the two places. The provincial authorities asked the sector and coastal localities to ensure food safety, environment hygiene and security for visitors. Life guards work on shift at the beach to keep travellers at ease when they explore the sea while the water level is monitored regularly to check its safety level. Cua Lo beach township – a popular tourist destination, has launched new services such as canoeing and riding e-bicycles around landmark sites. In early June, visitors flocked to Cua Lo which is sometimes overcrowded.- BIDV official chairs VDB  An official from the Bank for Investment and Development of Viet Nam (BIDV) has assumed office as chairman of the Viet Nam Development Bank (VDB). Deputy Prime Minister Vuong Dinh Hue granted the decision to appoint BIDV Deputy General Director Pham Quang Tung to the new position on Monday. The decision was signed by Prime Minister Nguyen Xuan Phucc on May 30. Tùng replaces Nguyen Quang Dung, the retired acting chairman of VDB. VDB, with VND30 trillion (US$1.33 billion) in equity, focuses on lending in areas such as socio-economic infrastructure, support industries, agriculture and rural areas, as well as education, healthcare, environmental protection and green technology, along with clean and recycled energy. It also finances important exports, distributes official development assistance (ODA) capital to specific projects, and guarantees loans borrowed by small and medium-sized enterprises. BIDV was among the three domestic banks listed in Forbes Global 2000, an annual ranking of the world's largest public companies, this year. It ranked 1691 with US$2.6 billion in revenue, $287 million in profits, $34.7 billion in assets and $2.8 billion in market value. Credit for SOEs accounts for 15-17% of outstanding loans Credit for State-owned enterprises (SOEs) currently accounts for roughly 15-17 per cent of total outstanding loans, deputy governor of the State Bank of Viet Nam (SBV) Nguyen Thi Hong said. Previously, credit for SOEs was relatively high, but now, credit for private enterprises has increased significantly, Hong said, adding that the central bank has always targeted credit for production and business operations, especially in the Government's prioritised industries such as agricultural and rural development, exports, support industries, small- and medium-sized firms and high-tech enterprises. However, she admitted that the capital market is under development to help enterprises with their long-term capital mobilisation requirements as the market was unbalanced due to the dependence on bank credit. Hong said the Government was very interested in the development of the financial market, including the monetary market, to create numerous channels to generate capital for enterprises. Deputy Prime Minister Vuong Dinh Hue recently also instructed the SBV and relevant ministries to develop the financial market to a healthy level and diversify enterprises' capital mobilisation channels, she said. Hong made the move as representatives from the private sector at a recent forum to support the sector said it was facing many difficulties, where the greatest challenge was access to capital. According to the representatives, while the private sector needs capital from many investors and numerous capital mobilisation channels, Viet Nam's financial market is unbalanced as most of the capital for enterprises comes from commercial banks. The capital source, with typically short tenures and volatile interest rates, in addition to asset mortgage requirements, often has a significant effect on the enterprises' long-term business and development strategies as well as their capital mobilisation costs. Meanwhile, capital funding from the securities market accounts for some 30 per cent of overall funding sources. According to the representatives, the total outstanding loans are worth more than VND200 billion (US$8.88 million), and the capitalisation value of the securities market is worth roughly $60 billion. However, the corporate bonds market is only worth roughly $1.3 billion due to a shortage of large investors and the introduction of poor financial products. E-payments booming in Viet Nam Increased use of electronic payment products added US$880 million to Viet Nam's Gross Domestic Product (GDP) from 2011 to 2015, according to a new report released by Moody's Analytics. The report entitled "The Impact of Electronic Payments on Economic Growth" said that more products including credit, debit and prepaid cards were increasingly being used, helping to create an average 75,000 jobs annually during the five-year period. Conducted in 70 countries over four years, the report looked at how electronic payments affected economies. Globally, it said that increased usage of electronic payments created on average 2.6 million new jobs per year and added $298 billion to GDP, while raising household consumption of goods and service by an average of 0.18 per cent per year. Of the countries in ASEAN featured in Moody's report, Viet Nam experienced the second highest rate of GDP growth due to increased use of electronic payments. Singapore was third and Thailand first. The research report found that the electronification of payments benefited governments and contributed to a more stable and open business environment. "Electronic payments help minimise what is commonly referred to as the grey economy — economic activity that is often cash-based and goes unreported," the report said. Vietnamese businesses boost lychee exports Việt Nam’s enterprises are ready to promote lychee exports this year, the Ministry of Agriculture and Rural Development (MARD) said. This year, lychee output was expected to reach 130,000 tonnes in Bắc Giang Province and 50,000 tonnes in Hải Dương Province. The lychee output in Bắc Giang was estimated to reduce by 10 per cent against 2015. But the output of high quality lychees under VietGap and GlobalGap, national and international quality standards for farming products, have been increased, Bắc Giang Province reported. Hoàng Trung, head of MARD’s Plant Protection Department, said the department has granted 29 codes for 300ha for growing lychees, mostly located in Bắc Giang for exports to high demand markets. Many enterprises have come to the lychee growing regions with codes to order lychees for exports, he said. They would focus on exporting to Australian markets while also paying attention to the United States, European Union and the Association of South East Asian Nations markets. The Hà Nội Irradiation Centre is ready to implement irradiation services for fruit exports this year to reduce spending for lychee export activities. The department has complemented procedures to get recognition from Australia for certificates of the centre, he said. Dương Văn Thái, deputy chairman of the People’s Committee of Bắc Giang Province, said the province expected to sell 78,000 tonnes of lychee on the domestic market and export 52,000 tonnes this year. For export markets of Vietnamese lychees, last year, China was the largest export market with an export volume at 100,000 tonnes, accounting for 50 per cent to 60 per cent of total export volume. This year, Trung said the department has asked phytosanitary agencies in Lào Cai and Lạng Sơn provinces to create favourable conditions for issuing export licences to lychees as soon as possible. The deputy head of customs department of Lạng Sơn Province, Vy Công Tường said his department would create conditions for lychee exports, including transport, warehousing and administrative procedures. At present, Việt Nam has negotiated with China to accord highest priority to export lychee to China and then other fruits, reported chinhphu.vn. Meanwhile, the People’s Committees of Lào Cai, Bắc Giang, Hải Dương and Hưng Yên provinces which account for a large lychee-growing area in the country met in late May to promote the exports of Vietnamese fresh lychees to China via the Lào Cai border gate. Authorities pledged to facilitate administrative procedures, ensure transport safety, and enhance market management to reduce frauds in the trade of the fruit, reported vietnamplus.vn. Deputy Director of the Lào Cai Department of Industry and Trade Nguyễn Trường Giang said the provincial management board of economic zones has asked farmers to study the market to have a proper export policy in place. The province also advised farmers and businesses to export via trade contracts to avoid the risk of economic losses. It pledged to create the best conditions for firms to export fresh lychees through Lào Cai border gate, he added. Yang Peng, deputy chief of the Hekou district in China’s southern Yunnan province, said that the Chinese side will make it easier for bilateral trade and easier customs procedures. The district’s authorities asked Vietnamese firms to strictly follow the customs procedures of the two countries, he added. More than 26,000 tonnes of fresh lychees worth US$11.6 billion were exported to China via Lào Cai international border gate in 2015. In 2016, the volume of fresh lychees exported via the gate is expected to equal the previous year’s amount, or about 420 tonnes per day. FPT inaugurates two data centres with Uptime Tier III certification FPT Telecom on June 6-7 inaugurated the expansion of two data centres with Uptime Tier III certification in Tan Thuan Export Processing Zone (EPZ), Ho Chi Minh City, and The Data Centre EPZ is built on an area of nearly 6,000 sq.m in Tan Thuan EPZ, which can house a total of 800 rack cabinets and is considered the largest data centre in the south.   Data Centre EPZ has achieved the first Uptime Tier III certification for the first time since 2013, making Vietnam to become the third nation in South East Asia to possess the prestigious certificate, after Malaysia and Indonesia. At the inauguration ceremony, FPT Telecom unveiled a plan to cooperate with Internet Initiative Japan Inc (IIJ) in developing and providing cloud services in Vietnam since May this year. FPT’s Data Centre system was put into operation since 2009, aiming to serve the increasing demand for archives of thousands of businesses, organizations and consumers across the country. Uptime Tier is the most prestigious evaluation criteria system in the world, certified by the Uptime Institute of the US, which specializing in evaluating and granting certifications for Data Centres. The Uptime Institute has so far awarded certifications for Data Centres in 72 nations around the globe. HCMC Party Chief prompts agencies to simplify real estate procedures Secretary of the Ho Chi Minh City Party Committee Dinh La Thang this morning urged responsible public agencies to solve difficulties for real estate businesses, review and simplify administrative procedures at the maximum level and consider this as a breakthrough solution to reclaim businesses’ belief. After listening to reports about the real estate market by chairman of the HCMC Real Estate Association (Horea) Le Hoang Chau, he urged the city to solve difficulties for real estate businesses. The real estate market is one of significant factors in boosting the city’s economic growth and contributing in the country’s growth target of 6.7 percent this year, he said. At the meeting, Mr. Chau reported to the secretary that the real estate market is still under recovery and growth phase. Compared to 2015 when the market saw a strong growth in all segments, but it showed signs of slowdown in the first five months this year with implicit unstable factors. For instance, transactions have slowed down and leaned toward high grade segment while there is a shortage of small and medium apartments having one to two bedrooms, affordable for a lot of citizens. In addition, there is a strong increase in the number of secondary transactions. The market has also seen some project investors not abide by regulations on investment and construction. Many apartment blocks have been opened for dwellers while yet to meet relevant conditions. Some businesses have not complied with regulations on mortgage and house sale causing damage to consumers and affecting social welfare. Conflicts have become complex in a number of apartment buildings. Forecasting the real estate market in the last seven months this year, Mr. Chau said that the market would be better than the first five months. However, it would be still in the state of slowdown for the entire year. According to Mr. Chau, although the Government and the city’s leaders have pledged to change and create some mechanisms and solve existing difficulties for businesses, the real estate market has till faced many problems including land use fee. The land use fee is a large budget revenue source of the city but many investors have to queue waiting for paying the fee. This is because the process to determine the fee is unreasonable for being undertaken by the Department of Finance and the Department of Natural Resources and Environment. The later department organizes online bidding to choose consultant companies to determine land price and propose the land use fee of projects. Afterwards, it will transfer the proposal to the Department of Finance to assess the fee level. If agreeing with the proposed fee, the Finance Department will submit the proposal to the city People’s Committee to get a final decision. If disagreeing, it will send documents back to the Environment Department to do procedures again. This process has been irrational and time consuming. Before the Land Law 2013 took effect, only the Department of Finance was in charge of assessing the land use fee, so it was faster than now. Therefore, Horea proposed the city to assign either of the departments to take responsibility for the process to save time, clear backlogged documents for investors to implement their projects and not to miss their opportunities. Mr. Chau said the current land use fee assessment phase is a lucrative land for corruption and other profit seekers and proposed the city’s leaders to pay attention to supervise this and especially cadre management. In response to Mr. Chau’s opinion, director of the Department of Natural Resources and Environment Nguyen Toan Thang said that the city has built a process to determine land prices for compensation or other financial obligations within 30 days. The process is available on the department’s website, he added. Meantime, a representative of the Department of Finance said that they have conducted assessment works within five days after receiving documents from the Environment Department. However he also admitted that the land price determination of some projects has been slow because of cadres’ faults although that plays a very important role to conduct following steps of projects. Hanoi issues infrastructure upgrade wishlist Hanoi is calling for investment of USD15.4bn for the constructions of four new railway lines and dozens other public–private partnership projects. Hanoi’s authorities have said they planned 52 projects for 2016-2020 valued at USD15.4bn. Of which four flyovers projects alone will cost USD7bn. The projects include a 47km elevated railway from the city centre to Noi Bai Airport which could cost USD650m. Other projects are an 18km-long railway from Lien Ha Commune to Vinh Tuy Ward, 8km railway line from Hanoi Train Station to Hoang Mai District and another 38.4km urban railway. The authorities have also called for investment for five medical projects, 12 fresh water projects, 15 industrial and trade zones, five parking lots, 11 parks and 10 social housing projects. The authorities have earmarked USD15bn to upgrade and renovate existing housing. There are 10 buildings are seriously deteriorated and need to be renovated or rebuilt quickly to ensure the residents' safety. Most of these projects were done with ODA or BOT models in the past. While public-private partnership models are nothing new in many countries, Vietnam is only now getting to grips with this form of investment. Hanoi’s authorities want to ease pressure on the state budget with this model and hope that experienced investors will be interested. Thua Thien-Hue establishes new tourism department The central province of Thua Thien-Hue on June 6 announced the Decision No. 35/2016/QĐ-UBND on the establishment of its Department of Culture and Sport and Department of Tourism. Accordingly, the Thua Thien-Hue provincial Department of Tourism is a specialised agency under the management of the provincial People's Committee, established following the separation of the State management on tourism from the Department of Culture, Sports and Tourism of Thua Thien-Hue. The tourism department has a separate legal status, seal and account under the management on organisation, staffing and operation by the Thua Thien-Hue People's Committee, while simultaneously under the direction, guidance, and inspection of the Ministry of Culture, Sports and Tourism and Vietnam National Administration of Tourism. Similar to the Department of Culture and Sport, the Department of Tourism has the function of advising and assisting the provincial People's Committee to perform the State management function over tourism in the locality, while performing a number of tasks assigned or authorised by the provincial People's Committee and its Chairman on tourism. According to Vice Chairman of Thua Thien-Hue People's Committee Nguyen Dung, the locality has a rich heritage with nearly 1,000 historical, cultural and revolutionary relics, as well as religious architectural monuments. In particular, the Complex of Hue Monuments has been recognised as an UNESCO World Heritage Site. The tourism industry in the province has affirmed its role and position as a major economic sector with steady growth and an increasing scale of operation. During the 2010-2015 period, the number of tourists to Thua Thien-Hue recorded an average annual increase of 13%, reaching over 3.1 million visitors in 2015. The establishment of the department is necessary amidst tourism’s strong growth, and is consistent with requirements for local development. Thua Thien-Hue set a target to welcomed 5.7 million visitors by 2020, including 2 million international visitors, with tourism revenue reaching VND6 trillion and an average growth of 12-15% during the 2016-2020 period. Trade surplus reaches US$1.3 bln in five months Viet Nam gained US$14.6 billion from exporting in May, up 1.74% compared to the previous month, raising the total export value in five months of the year to US$67.7 billion, a year-on-year increase of 6.6%, according to the statistics the Ministry of Industry and Trade released on June 6. Of the figure, the State sector contributed US$19.44 billion, up 3.9% while the foreign-invested sector made up US$48.3 billion, up 7.7%. Some key export items of the foreign-invested sectors witnessed sharp increases in turnover such as phones and spare parts US$14.4 billion, up 20.6%, garment US$8.6 billion, up 6.1%, electronics, computers and accessories US$6.3 billion, up 5.4%. Viet Nam’s import turnover in May reached US$15 billion, up 6.6% against the previous month, which contributed to the total import value in five months to US$66.3 billion, a year-on-year increase of 0.9%. The State and foreign-invested sectors made up US$27.2 billion and US$39.1 billion (including crude oil), up 0.7% and down 1.9%, respectively. Viet Nam bought the largest amount of goods from China in five months with US$19.2 billion, down 2.9%, then ASEAN US$9.4 billion, down 4.2%, Japan US$5.7 billion down 6.4%, the EU US$3.8 billion, down 3.7% and the U.S. US$3.2 billion, up 4.4%. May witnessed an estimated trade deficit at US$400 million, however, a trade surplus of US$1.36 billion was recorded for five months. Minister of Industry and Trade Tran Tuan Anh asked functional agencies to review administrative procedures in exports and imports to help businesses reduce expenditures and improve competitiveness. He also required communicating free trade agreements for businesses to fully tap benefits brought by them. E5 proposed as replacement of RON92 gasoline The Vietnam Biofuel Association has petitioned the Government to replace RON92 gasoline with E5 bio-fuel in eight provinces and cities in a roadmap towards using the bio-fuel nationwide. These localities are Hanoi, HCMC, Haiphong, Danang, Can Tho, Quang Ngai, Quang Nam and Ba Ria-Vung Tau. Earlier, major fuel wholesalers in HCMC made the same proposal. The media recently reported RON92 might be replaced by E5. However, a representative of the Ministry of Industry and Trade confirmed that E5 petrol and RON92 gasoline would co-exist for the time being. The State now encourages more sales of E5 gasoline, saying a complete shift to this bio-fuel would happen when stable supply is guaranteed. Quang Ngai, Quang Nam and Danang are the nation’s three provinces that have completely shifted to using E5, while other provinces and cities have had difficulty convincing private fuel dealers into selling E5 due to low demand. The association said selling both types of gasoline is causing difficulties for retailers because they have to build separate pumping and storage systems for E5 at their current gas stations. Fuel trading firms said consumers still prefer fossil fuels including RON92 because they are not used to using E5 and moreover, the E5 price is not much lower than RON92. Private pumping stations have shown reluctance to sell E5 for fear that their sales revenue would be affected. Deputy Prime Minister Trinh Dinh Dung has assigned the Ministry of Industry and Trade to prepare a roadmap to replace RON92 with E5 at the request of the association and report to the Prime Minister in June. In 2015, eight provinces and cities consumed more than 278,000 cubic meters of E5 petrol, about 15.72% of total gasoline sales. E-payments add US$880 million to Vietnam’s 2011-2015 GDP The rising use of electronic payment products including credit, debit and prepaid debit cards contributed US$880 million to Vietnam’s gross domestic product (GDP) between 2011 and 2015, according to research conducted by Moody’s Analytics for Visa. Although the total value of transactions through electronic payments remained low, the Moody’s report, called “The impact of electronic payments on economic growth,” ranked Vietnam second among the countries in the region in terms of GDP growth supported by improved use of e-payments. The use of electronic payments created an annual average of 75,000 jobs during the period, Moody’s economists estimated. The research also found that this payment method benefited the governments and helped create a more stable and open business environment. E-payments helped minimize “the grey economy” in which activities are cash-based and often not transparent, thus resulting in higher potential tax revenues, it noted, adding they would reduce cash handling costs, guarantee safer merchant payments and better engage payers in financial transactions. Sean Preston, Visa’s country manager for Vietnam, Cambodia and Laos, said: “Moody’s findings reinforce the many positive benefits that electronic payments bring to local economies all over the world including here in Vietnam.” E-payments continued to show strong growth in Vietnam in 2015 with the total number of transactions via Visa-branded cards growing by 34% and an expansion of Visa’s transaction network, he said. Online shopping using Visa cards last year experienced a 47% leap in Vietnam with an internet population of over 45 million. Authorities to collect transfer tax from Big C acquisition deal Tax authorities are awaiting official information from a Big C supermarket chain acquisition deal between Casino Group and Central Group to calculate a transfer tax. According to the General Department of Taxation, the two groups have informed the taxman of the deal in accordance with Vietnamese laws and international practices. Thailand’s Central Group and its local partner Nguyen Kim Trading Company have jointly acquired Big C Vietnam for 920 million euro (US$1.05 billion) from France’s Casino Group. Nguyen Kim is now 49% owned by Central Group. The tax authority has a solid legal basis to collect the transfer tax from the deal although it was conducted outside Vietnam’s territory. However, lawyers said it would be tough to tax the transaction. Earlier, the General Department of Taxation collected VND1.91 trillion (US$85.2 million) in transfer tax from a deal which Metro Group sold its wholesale firm Metro Cash & Carry Vietnam to Thailand’s TCC Holding for 655 million euros. The tax authority is boosting tax collections from M&A deals as they have contributed significantly to State budget revenues. Business owners accuse grassroots authorities of harassment Young business owners attending a meeting in Hanoi last week with Deputy Prime Minister Vuong Dinh Hue accused grassroots authorities of harassment. Do Huy Hieu, director of DVH-Bransons Co Ltd which provides training for enterprises, said that to invite foreign experts to join training programs lasting two to three days, his company is required to submit an application to authorities one month in advance. “If the application comes two days later than required, it would be rejected,” he told the meeting which was attended by 100 young entrepreneurs. Hieu said he had been asked to pay VND15 million for a license from a third party. “No informal fee, no license,” he said, adding small enterprises could not afford to pay all sorts of informal fees. Song Long Khanh Hoa Co., which specializes in aquaculture veterinary medicines, has been struggling with frequent checks by economic police and market monitors, said director Vo Thi Tuyet Ha. Tran Quoc Bao, chairman of Martin Corp., said his company’s website hoangsa.edu.vn is no longer accessible as the domain name reminds people of Hoang Sa (Paracel) islands. Therefore, the firm’s email system is down also, disrupting communication with customers. Another entrepreneur at the meeting complained about the 2% labor union fee is high. Other business owners said they were having trouble with complicated business requirements and administrative procedures, and little tax incentive, so they cannot compete with foreign rivals. Speaking at the meeting, Hue said irresponsible officials and civil servants must be sanctioned. Hue said the Government is trying to back enterprises by improving institutions and policies about investment, business incubation, human resources development and innovation for the benefit of startups. The Government has issued resolutions designed to improve the investment and business environment and fostering the development of private enterprises. A draft law on support for small and medium enterprises will be presented to the National Assembly. Hue said enterprises of different sizes in the private and public sectors would get equal treatment from the Government in line with market rules. Ways to develop small and medium-sized enterprises under spotlight A wide range of measures involving the change of legal documents alongside practical support to further facilitate the development of small and medium-sized enterprises (SMEs) have been recommended at a recent conference in Hanoi. Vietnam currently has around 400,000 SMEs, making up 97 percent of the total number of enterprises operating in the country, contributing 40 percent of the gross domestic product and creating jobs for 52 percent of the domestic workforce. Despite those impressive proportions, SMEs still have many difficulties in accessing resources and business opportunities like loans, market and information, in addition to their own weaknesses including small scale and poor business management capacity. Le Hong Son, former head of the Bureau of Legal Normative Documents Post-Review under the Ministry of Justice, said SMEs still face unfairness in terms of business conditions in the very legal documents themselves. Son cited as an example Circular 23/2015/TT-BKHCN issued by the Ministry of Science and Technology which forbids the transfer of imported used machinery between enterprises except in the case enterprises go bankrupt or end their operation. He said this violates the ownership and free business rights as well as causes great wastefulness. Another circular he mentioned was Circular 56/2014/TT-BTC of the Ministry of Finance that requires price-declaring procedures that are not compatible with the law. According to economic expert Le Duy Binh, the government should play the role of creating favourable for the development of enterprises instead of protecting them. Support programmes and services for SMEs are also necessary but should be limited to avoid violating market principles and international treaties, he said. Agreeing with Binh, Le Van Khuong, Head of the Division for Development of SMEs, at the Ministry of Planning and Investment’s Department for Enterprise Development, said the government’s assistance should be selective, specific, transparent and equal. Over 10,000 Mazda cars recalled for engine warning light issue Vina Mazda Automobile Manufacturing Co.Ltd, a subsidiary of Truong Hai Auto Corporation (THACO) has issued a recall notice for 10,100 Mazda 3 cars for a “Check-Engine” warning light problem. All the recalled cars were manufactured since December 9, 2014, using a 1.5 littre Skyactive engine of the cars7,740 are sedan units and 2,360 are hatchback cars. The recall will run from June 16, 2016 to December 2017 in all Mazda car authorised agents nationwide. The complementary inspection and amendment for each car is expected to take four and a half hours. Experts found that soot in the fuel injector was the cause of the engine warning light. The engine warning light continuously appears on the dashboard, a problem causing inconvenience for car drivers. The issue has been reported by Vietnamese clients since the middle of 2015. Mazda was the best-selling model in the Vietnam market with an accumulated 20,359 cars sold in 2015, registering a 116 percent growth compared to 2014. Thaco, the largest automobile maker in Vietnam has produced and already distributed vehicles for three manufacturers including Kia from the Republic of Korea, Mazda from Japan and French giant Peugeot.- Thua Thien-Hue to take measures to boost tourism The central province of Thua Thien-Hue will continue implementing a series of measures this month in a bid to attract more holiday-makers. The province will improve state management in tourism as well as boost tourism promotion campaigns and introduce new tours of rivers, lagoons and traditional craft villages. Recently, Thua Thien-Hue has focused on promoting eco-tourism sites in Phu Loc, Nam Dong and A Luoi districts with the aim to redeem the sag in sea tourism which was badly affected by the recent mass fish death incident. According to the provincial Department of Culture, Sports and Tourism, the locality welcomed over 1.42 million tourists , including nearly 500,000 foreigners, in the first five months of this year,. The sector generated 1.31 trillion VND (57 million USD) in revenue from January to May, up 8.34 percent against the same period last year. During the Hue Festival held from April 29 to May 4 alone, the province greeted over 250,000 visitors, 68,200 of whom were from abroad, representing year-on-year increases of 23 percent and 5 percent, respectively. This year, Thua Thien-Hue set a target of welcoming 3.2-3.5 million tourists who are expected to bring 3.3-3.5 trillion VND (143-152 million USD) to the province. Vietnam’s economy sees recovery momentum in Q2: HSBC Despite a gloom in the Purchasing Managers’ Index (PMI) in the region, Vietnam’s PMI continued to expand, reaching a ten-month high of 52.7 in May from 52.3 in the previous month. According to the latest report on the prospects of Vietnam's market released by t he Hong Kong and Shanghai Banking Corporation (HSBC), economic indicators in the second quarter of this year showed a strong recovery of the national economy. The number of new orders rose sharply, indicating that manufacturing operations are likely to grow in June. The index of industrial production and exports also recorded consistant growth in the period. The lingering El Nino will likely continue to affect agricultural output, the report said, however, it also forecasts that the strong development of manufacturing industries and services will lift the GDP growth in this quarter to 6.1 percent. HSBC also kept its GDP forecast in the whole year of 2016 unchanged at 6.3 percent. The bank put forward medium-term solutions on financial reform in Vietnam, including broadening the base of profit, and adjusting accounting methods in line with international standards. Administrative measures to restrain tax evasion, the announcement of tax fraud cases and the simplification of the VAT refund process will be helpful solutions, the report stated. Vietnam’s exports to China rise by 16.5 percent Vietnam’s exports to China hit 5.8 billion USD in the first five months of 2016, an increase of 16.5 percent year on year, while imports from China fell 3.67 percent to 14.73 billion USD, according to the General Department of Vietnam Customs. Vietnam mainly imported machines, equipment, mobile phones, computers, fabrics, iron and steel from China. Vietnam expects to ship about 20 billion USD worth of commodities to China and spend 48 billion USD on imports from the partner this year. Its trade deficit with China would total 28 billion USD, 13.6 percent lower than last year’s 32.4 billion USD. The contraction could be a good sign for Vietnam which has long been dependent on exported goods from China. However, the Ministry of Industry and Trade warned that the figures might not reflect the real trade gap between the two nations. It did not take into account cross-border trade in which China still enjoys a vast surplus. Vietnam reported 134 billion USD in trade revenue with foreign partners during the period, with export turnover of 67.7 billion USD, up 6.6 percent year on year, and import value of 66.3 billion USD, down 0.9 percent. The United States continued to be Vietnam’s biggest buyer, importing 14.6 billion USD worth of commodities from Vietnam, up 14.9 percent compared to the same period last year. It was followed by the European Union with 13.3 billion USD in imports, up 11 percent. Deputy PM urges HCMC to equitise SOEs Deputy Prime Minister Vương Đình Huệ has urged HCM City to accelerate the equitisation of State-owned enterprises (SOEs) to ensure that an SOE plan approved by the Prime Minister is completed by 2018. In his report after a working visit to HCM City in late May, Huệ said the city should continue to amend its SOE restructuring plan in accordance with the Decision No 37/2014/QĐ-TTg in June 2014 which gives details about criteria for classifying SOEs. The main purpose of Decision 37 was to reduce the number of sectors where the State is required to be a majority or sole shareholder and to encourage private investment. In particular, all SOEs in the city must be restructured so that the Government’s stake will be reduced to a low level or zero when they are equitised. Huệ also asked the city to complete a master plan on the restructuring of agricultural and forestry companies under the municipal administration and submit the plan to the Government for approval. He urged the city to identify the public service agencies which could qualify for equitisation. Eligible units would then be submitted to the Prime Minister for approval and equitised in accordance with the Government’s Decision No 22/2015/QĐ-TTg on transformation of public non-business units.    Huệ stressed the need for the city to seriously implement financial autonomy policies at local public service units.        In addition, the Deputy Prime Minister told the city government to outline a comprehensive plan for implementation of Resolution No 35/NQ-CP. This new policy issued on May 16 concerns the support and development of enterprises by 2020. It emphasises the city’s role in stimulating and promoting business development. In his report on the recent working visit to the Cửu Long (Mekong) province of Kiên Giang, Huệ asked the provincial leaders to develop projects that would store fresh water and prevent saltwater intrusion. This would ensure clean water supplies for production activities and people’s daily demand. Huệ said the province’s residents must be educated about the adverse effects of saltwater intrusion and the need to save fresh water. They also must be made aware of the importance of adapting to climate change by restructuring the breeding and raising of animals and plants. The deputy PM also asked Kiên Giang authorities to identify saltwater intrusion management projects that should be given investment priorities, putting them on a list to call for capital support from the Government. He advised Kiên Giang to adjust the province’s existing land-use plans, construction projects and tourism products in accordance with climate change.     Huệ also directed the Ministry of Planning and Investment to work with the ministries of Finance and Agriculture and Rural Development to gather proposals from Kiên Giang and other localities to report to the Prime Minister. Ninh Binh fertiliser plant faces closure The Ninh Binh nitrogenous fertiliser plant could soon shut down due to its huge losses, according to the Viet Nam Chemical Group (Vinachem). In June 1, Chu Van Tuan, Vinachem deputy general director, said the group could stop operations of the Ninh Binh nitrogenous fertiliser plant because disadvantageous weather conditions have affected agricultural production which led to lower demand for fertilisers, including nitrogenous fertilisers. In addition, farmers in the north mainly use phosphate fertilisers so nitrogenous fertiliser consumption has faced numerous difficulties, he said. In 2015, two Ninh Binh and Bac Giang nitrogenous fertiliser plants had an inventory of 180,000 tonnes and 70,000 tonnes of fertiliser, respectively, reported tienphong.vn. To deal with that situation, Vinachem directed the two plants to restructure production and business to suit the demand of the local market and production ability in them, so that the two plants could each have an inventory of 20,000 tonnes to 30,000 tonnes of fertiliser, Tuan said. The plant's construction was kicked off in May 2008 in Ninh Binh's Khanh Phu industrial zone and came into operation in 2012, 42 months after construction began. In the nearly four years since then, the plant has been continuously operating at a deficit, accumulating altogether over VND2 trillion (US$89.9 million) in losses. Notably, in 2012, the company's losses amounted to VND75 billion ($3.37 million), which increased to VND759 billion ($34.12 million) in 2013, VND500 billion ($22.48 million) in 2014, and VND370 billion ($16.63 million) in 2015. Vu Van Nhan, general director of Ninh Binh nitrogenous fertiliser plant, said the plant was forced to call a temporary halt to its operations in late March, but Vinachem decided against opening the plant's gates again. The company temporarily laid off 400 of its 1,100 workers, paying the monthly unemployment allowance of VND3.1 million to each worker. By May 25, the plant had 19,200 tonnes of fertiliser in stock, he said. In June 1, the management met workers to discuss resumption of operations. The plant was expected to resume operations a week later. However, Nhan said after restarting, the plant still faced many difficulties, including lack of workers, as some of them had moved to other businesses, and higher accumulated losses. According to the plant's report, its accumulated losses reached VND1.99 trillion in 2015. The plant suffered huge losses because nitrogenous fertiliser price dropped on the world market when faced with a situation of excess supply, Tuan said. Also, since the plant was a new business it did not have experience in marketing activities and sold fertilisers at prices lower than those of Chinese fertiliser products. That selling price was lower than the production cost. Thereafter, Vinachem proposed 11 plans for the plant to the government and the Ministry of Industry and Trade, including one of closure. If the Ninh Binh fertiliser plant closes, it would have to spend VND1 trillion per year towards repaying its debts. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR