BUSINESS IN BRIEF 5/7 Nearly 5,000 tariff lines has been above 0 percent   4,959 import tariffs, accounting for 52.4 per cent of the total, has been above 0 percent after the free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) comes into effect. In 2018, 144 tariff lines will be completed eliminated, increasing the number of zero-tax lines 5,103, or 54 per cent of the total. The government has drafted tax tables on preferential import tariffs to implement the free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) in the 2016-2018 period. According to the Vietnam’s commitments in the free trade agreement (FTA) between Vietnam and EAEU, the special preferential import tariff includes 9,471 tariff lines (not including 87 CKD tariff lines); each of the two sides will offer level of market opening in goods that account for about 90% of tariff lines, equivalent to over 90% of bilateral trade. BIDV granted licence to open branch in Myanmar The Bank for Investment and Development of Vietnam (BIDV) has been granted a licence by the Central Bank of Myanmar to open a branch in Yangon. BIDV Yangon began operating officially on July 1, nearly four months after the preliminary approval was announced on March 4. The bank said the Yangon branch’s initial capital was US$85 million. BIDV established its representative office in Myanmar in April 2010 as part of efforts to realise the Vietnam-Myanmar Joint Statement on co-operation in 12 prioritised areas, including finance and banking. Since then BIDV has been expanding its operations in Myanmar through its role in the Association of Vietnamese Investors in Myanmar, the opening of a branch of BIDV Insurance and BIDV Myanmar Finance Company. Over the past six years, BIDV has played a significant role in boosting Vietnam-Myanmar co-operation in investment, trade and tourism, helping make Vietnam one of the largest foreign investors in Myanmar. Vietnam’s direct foreign investment in Myanmar rose from US$23.65 million in 2010 to US$691.6 million at the end of 2015. Trade between the two countries also saw strong growth, averaging 25% a year during the 2010-2015 period. Last year, two-way trade reached US$435 million, nearly triple the figure in 2010. Tourism also witnessed fast growth with the number of tourists between the two countries rising at an average annual rate of 15%. The opening of BIDV Yangon marks the lender’s broader participation in Myanmar’s financial and banking system and comes in line with its strategy of market diversification and promoting growth in key regional markets. Environmentally-friendly textile supporting facilities required Prime Minister Nguyen Xuan Phuc has requested Thua Thien-Hue province to only license textile supporting industrial infrastructure developers which are committed to establishing a standard concentrated wastewater treatment system together with a monitoring mechanism. He made the request while assigning authorities of central Thua Thien-Hue province to complete and approve a project on developing a supporting industrial cluster for the garment and textile sector at the Phong Dien industrial zone. Production projects in the cluster need to be qualified for environmental protection measures as required by laws. Those using advanced technologies meeting technical standards of the European Union or equivalent ones will be prioritized. The PM has agreed to allocate 100 billion VND (4.5 million USD) sourced from the State budget to build a wastewater treatment plant at the cluster. Under the project, investors will be given incentives in credit loans, site clearance, and land leasing as well as corporate and individual income tax and other preferential treatments. Export of farmed fish fetches nearly 3.1 billion USD Export of famed fish brought home nearly 3.1 billion USD in the first six months of the year, a year-on-year surge of 3.8 percent, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). China, Japan, the Republic of Korea and the US remained the leading importers of the country’s farmed fish. However, prices of material tra fish in the home market fluctuated at 19,000 VND-20,500 VND per kilo - its lowest level ever recorded. No new orders from the main markets like the US and the EU hints sluggish consumption for Vietnamese tra fish in the coming time. Meanwhile, prices for material shrimp were stable despite limited supply stemming from unfavourable weather conditions. Vietnam’s combined agro-forestry-fishery export turnover was estimated at 15.05 billion USD in the first six months of 2016, up 5.4 percent from one year ago, the Ministry of Agriculture and Rural Development said. Of the total figure, farm produce exports were valued at 7.32 billion USD, a 5.1 percent increase against the same period last year while export value of forestry products in the period suffered a slight yearly downturn of 0.1 percent to 3.33 billion USD. In June, the agro-forestry-fishery sector earned an export revenue of 2.5 billion USD. Central bank governor stresses caution in price control Governor of the State Bank of Vietnam (SBV) Le Minh Hung has urged caution in price control as there will be a great pressure for raising lending rates in the time ahead. At the Government’s teleconference in early July, Hung said aside from existing price control measures, the prudent management of other macro-economic activities is needed to avoid affecting interest rates. While most of capital for the economy at present comes from bank credit, demand for raising capital through Government bonds is also higher. Hence, proactive and flexible management is necessary to keep lending interest rates stable, he noted. The six-month inflation rate at 1.72 percent is assessed as in line with monetary fluctuations since the year’s beginning, and price control work during the period has proved to suit the reality. Hung said the SBV will keep a close watch on moves in regional and international markets, especially in the EU and the US, in order to timely adjust monetary and exchange rate policies. With regards to the UK’s withdrawal from the EU (or Brexit), the Governor said the central bank immediately move to respond to the market’s psychological reaction, helping minimize Brexit’s impact on exchange rates and the rates are now stable. It is still necessary to evaluate more comprehensively the indirect influence of Brexit, particularly the devaluation of major currencies like the British pound and the euro, he added. Up to 4.49 trillion VND collected from divestment in H1 Up to 4.49 trillion VND (over 202 million USD) were collected by businesses during their divestment process carried out in the first six months of 2016, the Ministry of Finance announced at a recent conference in Hanoi. Economic groups and companies withdrew 357 billion VND (over 16 million USD) of their capital and collected 400 billion VND (18 million USD) from five sensitive fields, namely stock, insurance, banking-finance, real estate, and investment fund. They also divested 945 billion VND (42.5 million USD) and collected over 1.2 trillion VND (54 million USD) from businesses having invested in areas out of the five aforesaid ones. In January – June, the State Capital Investment Corporation (SCIC) sold over 1 trillion VND (45 million USD) of shares and collected more than 2.8 trillion VND (126 million USD). As of June 22, 39 State-owned enterprises had their equisation plans approved. The total book value of the businesses is over 27 trillion VND (1.21 billion USD), including over 21.6 trillion VND (972 billion VND) from the State. According to the equitisation plans, the chartered capital of these businesses is estimated at over 21 trillion VND (945 million USD), of which the State holds more than 9.8 trillion VND (441 million USD). It is planned to sold 7.05 trillion VND (317.25 million USD) of shares to strategic investors, 258 billion VND (11.61 million USD) to workers, 1.8 billion VND (81,000 USD) to trade unions, and over 3.8 trillion VND (171 million USD) for initial public offering. The Ministry of Finance said the restructuring of State-owned enterprises should be sped up to make sure the enterprises will operate in a more efficient manner. Vietnam, Cuba join hands to produce construction materials The Vietnam Glass and Ceramics for Construction Corporation (Viglacera) and Cuba’s Geicons Group are set to establish a joint venture producing ceramics sanitary wares and tiles in October. According to Viglacera, the two sides signed an agreement on the joint venture in April. The joint venture, once established, will contribute to meeting the demand on construction materials in Cuba as well as the Latin American market. Vietnam is the second biggest trade partner of Cuba in Asia, with bilateral trade value exceeding 207 million USD in 2014, according to the General Department of Vietnam Customs. Vietnam’s major exports to Cuba include rice, coal, chemicals, textiles and computers; while Cuba exports pharmaceuticals to Vietnam, worth nearly 1.3 million USD. According to the Ministry of Planning and Investment, as of December 2015, there was one Cuban project operating in Vietnam with a registered capital of 6.6 million USD. Vietnam also had one oil project in Cuba. Malaysia eyes Vietnamese tourists Malaysia’s southern state of Johor has made Vietnam’s southern metropolis - Ho Chi Minh City - one of three key targets of its tourism promotion campaign in the upcoming time, Bernama agency reported. Johor Tourism, Trade and Consumer Affairs Committee chairman Tee Siew Kiong announced on July 3 that he will lead a tourism delegation to HCM City by the end of this year to promote the state’s tourism products. The promotion mission is designed to attract more Vietnamese tourists to the state in the coming time. Johor’s Senai airport offers direct fights to Ho Chi Minh City and over 7,300 Vietnamese visitors arrived in the state through this route from January to May this year. Deputy PM wants balanced State budget On Saturday Deputy Prime Minister Vương Đình Huệ asked the finance sector to adopt drastic measures to ensure a balanced State budget and to meet State budget collection targets set by the National Assembly (NA) for 2016. Huệ said the Ministry of Finance needs to supervise domestic tax and expand the tax base, particularly concerning non-State sector revenue. He also said review of taxation is also needed and fairness in tax collection is essential. Huệ asked the finance sector to monitor the valuation of goods for tax calculation, including enhancing control at import customs ports. He said a review of tax collection policy is needed because taxes and tariffs will be reduced considerably as many free trade agreements Việt Nam has signed begin to take effect soon. Lower tax revenues from import-export duties will have a significant impact on budget revenue collection. Fighting fraud and wrongdoing in tax collection also needs to be a priority, Huệ said. "Policymakers can’t let special interest groups affect the process of drafting tax policies." Huệ said the country needs to cut down on spending. This spirit should be spread at the central and local levels. Deputy minister of finance Trần Hồng Hà said State budget collection in the first half of this year was estimated at over VNĐ476 trillion (US$21 billion), equal to 47 per cent of estimates and up 6.1 per cent over the same period last year. Hà said this increase was the lowest, compared to the same periods of the past two years. Meanwhile, budget spending hit VNĐ562 trillion ($22 billion). The Ministry of Finance said challenges remain through the end of this year, with the possibility of more natural disasters, diseases and fluctuations of the world market. Vietnam struggles to boost cement exports Vietnamese cement producers have struggled to boost exports because of increasing competition from Asian rivals, which are also faced with oversupply just like Vietnam. They said China is expanding exports amid an oversupply of 670 million tons a year, offering lower prices and worsening their own prospects. Tran Viet Thang, general director of the Vietnam Cement Industry Corporation (Vicem), said Chinese prices are $10 per ton lower. With domestic cement consumption expected to increase 4% year-on-year to 56.5 million tons this year, Vietnam will have a surplus of 25 million tons. “In this situation, many cement producers will have to cut or stop production if exports are not boosted.” Vietnam exported some 16 million tons of cement mainly to Bangladesh, Indonesia, Malaysia, and the Philippines last year. While struggling with low-priced Chinese products, local cement makers are also facing fierce competition from Thai rivals who offer quality products and rapid transportation, industry insiders said. There are no dedicated ports and logistics systems to serve cement exports in Vietnam. Most cement factories are located far from seaports, meaning they find it hard in transport to ports at reasonable prices. The Vietnam National Shipping Lines used to suggest that cement producers should cooperate with the Electricity of Vietnam and the Vietnam Oil and Gas Group to hire ships: The two companies would transport coal imported from Indonesia to Vietnam, while cement producers would use the same vessels to ship to the Philippines. VASEP: Seafood exporters trying to navigate rough waters The seafood industry is looking for a 4.5% increase in exports this year after shipments to overseas markets fell by US$1.2 billion in 2015, says the Vietnam Association of Seafood Exporters and Processors (VASEP). Foreign exchange fluctuations were partly responsible for the drop in the total value of foreign sales last year coupled with significantly reduced demand in several key markets including both the EU and US. The fall in exports marked the end of a two-decade-long run in overall growth in production and total exports. Now the industry is facing rough waters and a sea of problems, not the least of which, is the growing concern related to seafood safety and quality issues exacerbated by intense price competition from other exporting countries. Most concerning to VASEP is the spike in the number of shipments of seafood (including all edible fish, crustaceans and shellfish from fresh or salt water) being rejected by importing countries due to unacceptable levels of antibiotic residues and other contaminants. The nation’s seafood exports totalled US$6.7 billion in fiscal year 2015, according to VASEP, registering a sharp 15% decline compared with consignments of US$7.9 billion for the previous year. Farmed product accounted for roughly 65% of the total production in 2015 in terms of value. Frozen shrimp, mainly black tiger prawn, is the segment’s largest seller, accounting for about half of the total export value, followed by Pangasius catfish at about 25% market share. Seafood is the nation’s largest foreign currency earner and the fifth largest export item trailing clothing and textiles, electronics, crude oil and footwear, says VASEP. However, the global market for fish is highly volatile from year to year, says VASEP, noting that in 2014 exports experienced about a 16% surge in value only to swing back down by 15% last year. Strong competition from farmers in India in addition to other Southeast Asian and South American countries accounted for a large proportion of the drop in sales in 2015 says VASEP. Frozen shrimp sales in the US, one of the key overseas markets, was off by more than 50% for most of last year, while shipments to the EU, another key customer, declined 20% in value. Among the 28 countries in the EU, only the UK saw an increase in imports of frozen shrimp for the year, while Germany and the Netherlands both experienced significant reductions in sales. Although it’s anticipated the EU buyers will replenish their inventories this year, VASEP is concerned that an EU-Ecuador free trade deal that comes into force in October, 2016 will result in the lion’s share of those purchases going to Ecuadorean exporters. Shrimp exporters in Ecuador presently can ship a quota of 20,000 metric ton of product to the EU market tariff free for 2016. After the quota is reached they will enjoy a 3.6% tariff on the excess frozen uncooked shrimp exports, instead of the 12% tariff Vietnam exporters are subject to. That is until the new EU-Ecuador trade deal comes into force, at which time the quota for duty free shrimp exports from Ecuador raises to 40,000 metric tons, before the lower 3.6% tariff kicks in. Vietnamese Pangasius producers also are facing reduced demand for product, according to VASEP. This is largely due to lower demand from major markets including the US, Brazil, Mexico, EU and other Southeast Asian nations. Achieving the target of 4.5% increase in exports for 2016 is proving to be problematic, says VASEP, especially on the back of increased price competition from shrimp farmers in India, Indonesia, Ecuador and China. Particularly after these countries devalued their currencies against the US dollar to gain a price advantage, which is making the already rough waters a bit more turbulent to navigate. Vietnam may stop guaranteeing SOEs' loans as public debt rises In an attempt to keep public debt in control, the Vietnamese government may stop guaranteeing state-owned enterprises' loans. The Ministry of Finance has said in its recent proposal that the government needs to stop guaranteeing such loans for new projects starting next year and increase its overseeing of loans assigned to existing ones. The goal is to reduce these government-backed loans to 15.6% of public debt by the end of 2020, it said. Figures showed SOEs borrowed nearly US$21 billion with the government's guarantee as of the end of last year, or 17.6 percent of public debt. In 2011-15, the government guaranteed US$15.6 billion in loans for 35 projects of SOEs, a three-fold increase from 2007-10, according to the finance ministry. Electricity of Vietnam, oil giant PetroVietnam and national carrier Vietnam Airlines were among top borrowers backed by the government, it said. In another move, the ministry also sought to reduce government-guaranteed bonds issued by the Vietnam Development Bank and the Vietnam Bank for Social Policies over the next four years. The growth of the banks' outstanding bonds, estimated at around VND161.47 trillion at the end of last year, must be slowed down to 4-6% a year from 10% at the moment, according to the ministry. It is "a big risk" when the banks issue more bonds with a maturity of less than five years and then provide loans to projects with terms of seven to 10 years, it said. Latest figures released by the government in May showed Vietnam's public debt was equivalent to 62.2% of GDP. It will rise to 63.8% at the end of this year, and then 64.7% in 2018, or slightly lower than the threshold of 65%, according to the World Bank's projections. Vietnam's housing market slows down after strong recovery Following record sales last year, Vietnam's housing market has been slowing down, causing oversupply concerns. The Ministry of Construction has urged local governments, especially Hanoi and Ho Chi Minh City, to take cautions before licensing new residential projects to avoid possible oversupplies, the government website reported on June 28. Local authorities need to review local housing demands and take measures to improve the market's transparency, it said, citing the ministry's order. The ministry made the move amid reports that apartment sales in Vietnam have been falling. New figures released by CBRE Vietnam showed 10,107 units were launched in Ho Chi Minh City in the second quarter, up 20% from the first quarter. But sales dropped by 35% to 5,887 units. In Hanoi, 6,100 new units were launched in the past three months, a quarter-on-quarter increase of 19%. Although the city enjoyed a quarter-on-quarter rise of 20% in sales to 4,806 units, it was a decrease of 7.2% year-on-year, the company said. Vietnam's gross domestic product grew 5.52% in the first half year, compared to the expansion 6.28% recorded in the same period last year, according to official data. Investing in HR for future growth While joining the ASEAN Economic Community and the Trans-Pacific Partnership is expected to bring better opportunities for Vietnam including creating jobs and driving economic growth, it will also bring challenges in terms of increasing competition in business and human resource areas. Overall, AEC integration paves the way for Vietnamese businesses to access ASEAN’s market of more than 600 million people, to establish trade relations with potential partners overseas, and to grasp new technology. Economic integration will also create more jobs domestically, especially in sectors such as agriculture, logistics, information and technology, and tourism services. Six months after the AEC implementation, it is clear that a wider range of opportunities have been offered to Vietnamese labourers. However, the main beneficiaries are unskilled workers and young labourers with little work experience. Since the supply of management-level personnel is still insufficient to meet local demand, the cross-border movement of senior personnel from Vietnam to other ASEAN countries remains insignificant. There are only a small number of senior personnel who are capable of entering foreign labour markets to gain experience, mainly due to the human resource policies of some multinational companies. Vietnamese enterprises have now become more confident in taking advantage of opportunities brought about by AEC. They are gradually focusing on investing and expanding capacity in order to create a solid foundation, form confidence and equip enterprise managers with integrative thinking. For Vietnamese enterprises aiming to become a global company, there is a growth trend of sending personnel overseas for training, market exploration and partnership development. Besides, recruiting foreign personnel to managing positions requiring professional skills is also reported at these companies. Such movements will help firms access modern working styles with clear vision and effective strategies. Also, it will boost the competitiveness in terms of productivity amongst the company staff. Due to the increased awareness over the importance of human resources to business competitiveness, Vietnamese enterprises are rushing to invest more in personnel strategies, focusing on two key components, working environment and training, to develop skills and competency for employees. Regarding the working environment, businesses are both upgrading infrastructure and creating an open and friendly atmosphere to help increasing their staff’s effectiveness. With training activities we can form planning programmes and implement specific activities at all personnel levels and departments. Vietnamese enterprises have become more active in expanding their business ranges to other countries, leading to a higher number of representative offices and branches overseas and also a higher demand for senior personnel. Recruiting indigenous staff working for overseas-based offices can be seen as another initiative in human resources (HR) management.  This is advisable due to the fact that transferring key personnel from Vietnam to offices overseas will leave holes in the companies’ managing structure and also requires time for staff adaptation to new working places. Enterprises now consider HR development as an investment for their own future growth. HR development, in addition, is determined as a key driver for the firms’ development amid fierce integration challenges. To welcome foreign talent, a professional working environment is expected. Besides, it remains a challenge with policies relating to wages and the welfare of local and foreign labourers. Modern HR management needs to be scientific in its application, should utilise international methods and involve a professional department responsible for all related activities. The harmony between emotional and scientific factors will help Vietnamese enterprises retain employees. Foreign enterprises build well-designed HR strategies with a specific agenda in line with their overall business plan. In addition, their working management systems include effective tools to measure staff’s performance coupled with transparent criteria for promotion policies, however, many local enterprises have yet to pay attention to these factors. While the business sector is already on track to accelerate its integration into the regional economic community, it seems that the domestic workforce has yet to face these challenges. However, enormous challenges will arise when multinational resources began to penetrate the Vietnam market, especially in areas with specific expertise requirements. Local labourers will face fierce competition from their peers in developed countries, who are familiar with advanced technologies and standards. Hence, Vietnamese workers should always endeavor to improve their knowledge and skills to catch up with integration demands. It is undeniable that AEC has certain impacts on both Vietnamese enterprises and labourers, in terms of thinking, mindset and actions. Firms need to view human resources as the key business driver, which would lead to wise investment in improving working environments and training activities. To attract and retain talents is the task that needs the combination of both science and art, and it is the responsibility of not only human resources department but also managers of other departments, as well as the board of directors. Co-operation between levels and fields of management as such is crucial to ensure the sustainable development of any firm. Vietnam should increase pharma IPR protection Vietnam has been urged to improve intellectual property protection and the business climate in an effort to encourage foreign direct investment inflows to the healthcare sector. According to EuroCham’s Pharma Group, which represents 23 members worldwide, strong intellectual property rights  (IPR) protection and enforcement provides essential incentives for investment in the bio-pharmaceutical sector, and in all innovative industries. “We believe that IPR protection is good for investment. For Vietnam to grow economically, a legal environment that protects intellectual property is critical,” Jan Rask Christensen, senior director of EuroCham’s Pharma Group, told VIR. “Disrespect of IPR or arbitrarily revoking patents sends the wrong signals to all industries and investors by making them doubt the commitment of a government to the rule of law,” he said. A recent analysis made by the Global IP Centre shows that a 1 per cent increase in the patent rights index leads to nearly 3 per cent increase in foreign trade investment. “If Vietnam were to adopt improved patent protection and ensure proper enforcement, it would not only enhance its healthcare system but also create a more predictable environment for investment and promote Vietnamese access to high-quality, safe and innovative medicines,” Christensen said. According to the Pharma Group, the bio-pharmaceutical industry has the highest level of investment in research and development (R&D) globally at 14.4 per cent of revenue in 2013. It averages $2.6 billion for a drug to go from R&D to patient use. Bio-pharmaceutical firms invest 12 times more in R&D per employee when compared to the average of all other manufacturing industries. However, just two of every ten marketed medicines achieve returns that match or exceed average R&D costs. Also according to the group,   the Ministry of Health (MoH) and other government institutions have made a big effort to improve the healthcare landscape, this has been proven by a number of positive changes in the new pharmacy regulations. The new Law on Pharmacy, to take effect from January 1, 2017, has some amendments related to pharmaceutical practice, pharmaceutical sale, pharmaceutical registration and clinical medical testing, which is considered the biggest concern among foreign drug firms operating in the country. “The new law aims to solve problems in drug production and business, as well as meeting the development demand amid increasing global integration, thus helping improve patient access to medicines and give a boost to the industry development,” said Truong Quoc Cuong, head of the MoH’s Drug Administration of Vietnam. The Pharma Group recommends the full and complete implementation of Vietnam’s existing World Trade Organization commitments, allowing foreign investors to establish foreign invested enterprises in the pharmaceutical industry. In addition, they hope that adequate commitments, leading to the full liberalisation of distribution services, shall be made in the EU-Vietnam Free Trade Agreement and the Trans-Pacific Partnership. This would create a level playing field with other economic agents and ensure enhanced access to high-quality, safe, and innovative medicines. Furthermore, this would help improve health in Vietnam, and gear local industry for increased exports, which can help pay for future healthcare expenditures. MSN acquisitions a step closer to ambitions Masan Nutri-Science, a subsidiary of Masan Group, announced yesterday that it had acquired the remaining 30 per cent of animal feed subsidiary Agro Nutrition Company JSC (Anco), and at the same time increased its ownership in the country’s leading meat processor VISSAN to 24.9 per cent from the previous 14.0 per cent. These moves are consistent with Masan Nutri-Science (MSN)’s strategy to expand and deepen its presence in the meat value chain. The Anco acquisition was made by a share swap, following which MSN's effective ownership in itself decreased from 100 to 86 per cent. For VISSAN, MSN announced spending an average VND106,000  ($4.82) to buy each share of the market-leading meat player,  32 per cent higher than the IPO price of VND80,053 ($3.64). According to Viet Capital Securities Company, MSN is estimated to have spent roughly VND2.2 trillion ($100 million) to acquire the entire 24.9 per cent stake. MSN is willing to pay such a high premium because a partnership with VISSAN is important to get closer to realising MSN’s feed-farm-food value chain ambitions. In March this year, MSN (via its subsidiary Anco) beat South Korean conglomerate CJ to become VISSAN’s strategic investor, and acquired 14 per cent in the prized state-controlled company. Anco bought 11.3 million VISSAN shares for more than $63.1 million, or VND126,000 ($5.75) apiece, one-upping CJ's bidding price of VND120,600 ($5.48) per share. Despite failing to become a strategic partner of VISSAN, CJ already acquired a 4.18 per cent stake in the company at its initial public offering. KIDO aims for 51% of Vocarimex KIDO Group Corporation has confirmed that it will bid to buy additional shares in the cooking oil giant the Vietnam Vegetable Oils Industry Corporation (Vocarimex) to increase its stake to 51 per cent from the current 24 per cent. The bid will be made during the second half of the year, Ms. Nguyen Thi Xuan Lieu, Deputy CEO of KIDO, told VET. “It aims to consolidate the company’s revenue and profit as well as improve its business performance and stabilize its material sources,” she said. The company’s ambitious target to acquire at least 51 per cent of Vocarimex was approved at its annual general meeting in mid-June, where the company’s Board of Directors described it as a “strategic move”. Established in 1992, Vocarimex had total consolidated assets of VND2.4 trillion ($109 million) as at the end of March. Its unrefined cooking oil accounts for 94 per cent of total revenues and 89 per cent of Vietnam’s unrefined oil supply. Vocarimex had 343 employees as at the end of 2015 and seven subsidiaries and associated companies. The State has a controlling stake in the Tuong An Vegetable Oil Company (Tuong An) and the Tan Binh Vegetable Oil Company (Nakydaco). It also has three vegetable oil joint ventures: Golden Hope-Nha Be Edible Oils Company, the North Oils & Fats Industries Company (Nortalic), and the Cai Lan Oils & Fats Industries Company (Calofic). Vocarimex also has a stake in a joint venture cosmetics company, LG VINA Cosmetics, and in a packing company, VMPACK. “Vocarimex has tremendous potential to develop but has not yet utilized its ability successfully,” Ms. Lieu said. “KIDO, along with Vocarimex, will improve the process of supply, maximize factory productivity and improve management at its affiliate companies and subsidiaries.” KIDO will also support Vocarimex in improving its R&D ability and product distribution, Ms. Lieu added. The Ho Chi Minh City-headquartered KIDO  was previously known as Kinh Do Corporation but changed its name after selling 80 per cent of its subsidiary the Kinh Do Binh Duong JSC (BKD) to the US’s Mondelēz International in 2014 for $370 million. KIDO also plans to fully divest from BKD by the end of this year by selling the remaining 20 per cent stake to Mondelēz International. The company’s consolidated financial report for the first quarter of 2016 revealed total revenue of more than VND393 billion ($17.86 million), down 65 per cent against the first quarter of 2015. KIDO has over 600 distributors, 31 Kinh Do Bakery outlets, and more than 200,000 retailers selling its products throughout the country Gross profit was almost VND160 billion ($7.27 million) in the quarter, a sharp decline of 60 per cent quarter-on-quarter. Consolidated net profit reached over VND28 billion ($1.2 million), down 6 per cent compared to the same period of 2015. The group currently has 8,000 employees. “This cooperation between two companies will add value to each other, with KIDO helping Vocarimex maximize its competitive advantage, thus providing consumers with more choice and better quality products while also benefiting investors and shareholders of the two companies,” Ms. Lieu said, who is also Managing Director of Vocarimex. Vietnam’s cooking oil market now has 40 companies producing and selling cooking oil products, 70 per cent of which are palm oil, 23 per cent soy bean oil, and 7 per cent vegetable oil, according to data from the Ministry of Industry and Trade. Tasco to increase healthcare investment Tasco, one of the biggest businesses to apply the build-operate-transfer (BOT) model in Vietnam, will boost its existing investment in the healthcare sector this year, in addition to real estate and traffic infrastructure, which are its core business fields. It will invest in at least 200 beds per hospital, but did not disclose the number of hospitals. The move was approved at the company’s annual shareholders meeting on June 24. Real estate investment under the BOT model will remain the primary investment field for Tasco this year, Ms. Vu Thu Trang, a representative from Tasco’s PR department, told VET. “The company will also focus on investing in the healthcare sector by cooperating with public hospitals under the government’s Resolution No. 93 on socializing healthcare,” she added. At the meeting, Tasco targeted revenue of VND2.4 trillion ($107 million) and after-tax profit of VND380 billion ($17.1 million) in 2016. In real estate, it will continue to implement the subsequent phases of its Foresa Villa project and a housing project for staff of the Central Party Committee and the "People" newspaper in Hanoi's South Tu Liem district, the Phap Van South Building project in Hanoi's Hoang Mai district, and the high-end apartment project at 48 Tran Duy Hung Street in Hanoi. In the field of transport infrastructure, Tasco will continue to implement BOT projects on National Highway No. 10 in Hai Phong city and in Dong Hung town, Thai Binh province. Regarding electronic toll collection (ETC), Tasco plans to finish the first phase, with investment capital of VND950 billion ($42.2 million). In this phase Tasco will build all necessary toll booths along National Highway No. 1 and in the central highlands along National Highway No. 14, from 2015 to 2016. In the second phase it will build toll booths on other expressways and national highways throughout the country, from 2017 to 2018. More than 100 will be built in total. Addressing the shareholders meeting, CEO Hoang Ha Phuong said that in order to implement the 2016 business plan, besides its own capital the company must mobilize other sources from financial institutions and investors. The meeting also approved the payment of a 12 per cent cash dividend, of which 7 per cent was paid in 2015 and the remaining 5 per cent will be paid after the annual shareholders meeting. The total dividend payment is VND174 billion ($7.73 million). In 2015, Tasco’s consolidated revenue stood at over VND2.26 trillion ($100.4 million) and after-tax profit VND160.2 billion ($7.12 million), representing 97.92 per cent and 110.46 per cent, respectively, of targets. In its revenue of VND597 billion ($26.5 million) in the first quarter of this year, revenue from toll operations contributed VND99 billion ($4.45 million) - much higher than revenue from other fields such as sales and services, with VND75 billion ($3.37 million), and construction, with VND14.7 billion ($662,162). Tasco sparked controversy in May when it proposed increasing BOT fees. The Ministry of Transport rejected the proposal, however, and asked the company to maintain the existing fees until the end of 2016. In early June, Chairman Pham Quang Dung was voted in as a National Assembly (NA) delegate for the 2016-2021 term. This was also controversial, as public opinion is very much against the increasing number of toll booths on Vietnam's roads. He was one of only two independent NA candidates. During his election campaign in the northern province of Nam Dinh, his hometown, Mr. Dung promised to create more jobs, contribute to welfare development programs, and cut poverty. He also urged the NA to encourage domestic and foreign businesses to support technical and social infrastructure and social security. Mr. Dung served for five years in the military and worked at a local irrigation logistics office for 15 years before heading into business 20 years ago. Manufacturing conditions improve in June Business conditions in Vietnam’s manufacturing sector continued to improve in June, with output growth quickening to an eleven-month high, according to the latest report from Nikkei and Markit Economics released on July 1. The Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - was 52.6 in June, broadly in line with the reading of 52.7 from May and signaling a further solid improvement in the health of the sector. Manufacturing operating conditions have now strengthened in each of the past seven months. “The Vietnamese manufacturing sector continued to build on a positive start to the year in June, with output growth continuing to accelerate on the back of solid expansions in new orders from both home and abroad,” said Mr. Andrew Harker at Markit, which compiles the survey. “Helping firms secure new business was competitive pricing, in turn facilitated by a moderation of cost inflation in the sector.” The rate of expansion in manufacturing output quickened for the fourth successive month and was the sharpest since July last year, according to the report. “According to respondents, higher new orders was the key factor leading production to rise,” the report noted. Total new business continued to increase at a solid pace, albeit one that was slightly weaker than in May. The rate of expansion in new export orders, on the other hand, accelerated to a 14-month high. Increased production facilitated a reduction in backlogs of work during June, for the third time in as many months. Moreover, the latest fall in outstanding business was the sharpest since October last year. Higher output requirements led manufacturers to increase both their employment and purchasing activity. Staffing levels rose at a solid pace and faster than recorded during May. Meanwhile, the rate of growth in input buying eased slightly in June. “That said, purchasing activity has now risen in each of the past seven months,” the report stated. Despite further growth in input buying, stocks of purchases decreased as items were used in the production process. This followed an increase in the previous month. Stocks of finished goods also fell in June, the sixth successive month in which this has been the case. Although input prices continued to increase in June, the rate of cost inflation eased to the weakest in the current four-month sequence of rising prices, according to the report. There were some mention of higher oil prices, but other firms indicated lower prices in global markets. Output prices decreased for the first time in three months, albeit only slightly. “According to respondents, weak cost inflation contributed to lower charges,” the report stated. Suppliers’ delivery times were unchanged in June, the third successive month in which lead times have either been stable or changed only negligibly. The latest assessment from the International Monetary Fund (IMF) released recently noted that Vietnam’s economy has experienced solid growth with low inflation, reflecting policy attention to maintaining macro-economic stability. Economic performance was robust through most of 2015, driven by rapid export growth, foreign-direct investment (FDI), and strong domestic demand. Manufacturing and exports moderated near year-end - reflecting slowing external demand - and agriculture production fell sharply at the beginning of 2016, owing to a severe drought and salinity, according to the IMF. Inflation fell below 1 per cent in 2015 before ticking upwards in early 2016 due to higher food and administered prices. “The current account narrowed sharply from rising imports and gross international reserves declined in the second half of 2015 before recovering in early 2016,” the IMF reported. Support for solar power development in south Enterprises in Ho Chi Minh City, Binh Duong, Long An, and Dong Nai are receiving support in an initiative to help develop rooftop solar photovoltaic systems being implemented by the UK Foreign & Commonwealth Office (FCO), the Dragon Capital Group (DCG), and the Energy Conservation Center (ECC). The project aims to produce clean and reliable energy for use at enterprises. The initial phase, the “Supporting the Southern Vietnam Solar Photovoltaic Development (Solar Hub)” initiative, with financial support from the UK Government’s Prosperity Fund, will last until March 2017. Technical support is offered for pre-feasibility studies, solar radiance resource measurement, and financial viability evaluation on selected rooftop solar power systems. The Solar Hub will gather and consolidate data from existing sites to build a database of solar information accessible to the government, suppliers, consultants and enterprises wishing to generate solar energy. An assessment of the legal and licensing implications of implementing the Vietnamese Government’s draft Solar Decision is among the project’s activities. The findings and case studies will be published on a solar-dedicated website for public access and shared with the city and provincial governments to support their policy development in promoting solar energy. “I am very pleased that Vietnam is among the first countries to benefit from the new £1.3 billion Prosperity Fund announced in 2015,” said Mr. Andrew Holt, Head of Prosperity at the British Embassy in Hanoi. “I am confident that the Solar Hub project will demonstrate real impact on the uptake of solar power in Vietnam and will help make the case for investment in renewable energy sources more generally.” According to Mr. Gavin Smith, Director of Dragon Capital Clean Development, “the solar industry in Vietnam is in its infancy and the supply of accurate and reliable information to a new market is critically important, therefore the Solar Hub will make a positive contribution to encouraging private sector investment in solar energy.” The UK has developed a vibrant solar industry and its universities, equipment suppliers, consultants and financial investors have great experience to share with Vietnam. The Solar Hub will focus on the fast growing commercial and industrial areas that enjoy the best solar resources and rapidly growing energy demand. The DCG will support this project and provide assistance in making Ho Chi Minh City the “solar capital” of Vietnam. After the successful implementation of the Pilot Program for Supporting Mechanisms of Solar Photovoltaic Investment in 2015 in Ho Chi Minh City, the city now has more than 1MWp of installed solar power. In 2016 the market continues its impressive growth with more than 2.5MWp of installed capacity from corporate investments. “We hope and believe that this FCO-funded project will be implemented effectively in southern Vietnam and especially in Ho Chi Minh City,” said Mr. Huynh Kim Tuoc, Director of the Energy Conservation Center. Fragrant, sticky rice export highly increases in first half Vietnam exported 2.73 million tons of rice worth US$1.2 billion in the first six months this year, reported the Vietnam Food Association. Of the total export volume, jasmine variety accounted for 29 percent, up from 22 percent during the same period last year. Sticky rice jumped from 6.58 percent to 16 percent. In June alone, businesses exported 450,000 tons of rice. The country is expected to export 5.7 million tons of rice in the second half this year. Demand from main markets such as China, the Philippines and Indonesia will continue to be stable. The prices of both domestic rice and export rice have been on the rise. Industrial park rent averages US$115 per square meter in HCMC Land hiring demand at industrial parks in the southern region has been on the rise with rent averaging US$63.3 per square meters. HCMC takes the lead with the price of US$115.2 per square meter thanks to developed infrastructures. The rent swings US$40-70 per square in neighboring provinces. The southeastern region is home to about 100 industrial parks and export processing zones, mainly concentrating in Dong Nai and Binh Duong provinces. The occupancy rate at these parks and zones is 74 percent, equivalent to 18,000 hectares out of the total of 24,255 hectares for rent. Seeking new drivers to boost Vietnam’s economic growth Vietnam’s total economic output in the first six months of 2016 grew by 5.52%, which is higher than the average during the same period from 2012 to 2014 but lower than the 6.32% expansion rate in the first half of 2015. Calculations by the General Statistics Office suggest that the economy must grow at least 7.6% in the remainder of the year so that Vietnam can achieve the projected growth target of 6.7% for the whole year. This is a highly formidable challenge if no urgent action is taken. A breakdown of sectors shows that output of the agro-forestry and fisheries industries slumped by 0.78% in the first half of 2016 while growth in industry and construction, which make the largest contribution to GDP, was also lower than the previous year. Industrial output expanded by only 6.82% compared with 9.66% seen in the first half of 2015. Exports, a driver of growth for many years, also posted weaker-than-expected growth at 5.9% compared with last year’s 9.3%, of which domestic enterprises saw an increase of 3.3% and the foreign sector 6.9%. Investment, another main driver of growth, also saw low State budget investment. According to the State Treasury’s data, disbursement of capital for construction as of June 30 was equivalent to only 25% of the year’s target, compared with 42.8% in 2014 and 36.8% in 2015. While Vietnam’s growth still largely depends on investment, such a slow disbursement pace does very little to stimulate the economy. It is apparent that there is not much room for growth this year. Increasing crude oil output as a measure to boost growth like what was taken in the previous years is also of little help as global oil prices, despite signs of recovery, are still far from being sustainable. In this context, hope can only be pinned to enterprises. In addition to existing ones, Vietnam has an additional 54,500 newly established companies, which, along with nearly 15,000 businesses resuming their operation, will become an important force to drive sustainable economic growth. More than ever, supporting enterprises by substantive measures is an urgent task. RoK becomes VN’s largest FDI provider The Republic of Korea (RoK) poured US$3.99 billion of FDI into Viet Nam in the first half of 2016, making it the largest FDI provider of the Southeast Asian nation, according to the Foreign Investment Agency under the Ministry of Planning and Investment. In the January-June period, total registered and additional capital valued US$11.284 billion, up 105.4%. Around US$7.25 billion of FDI was disbursed, representing a year-on-year growth of 15.1%.   In the reviewed period, 61 countries and territories provided FDI for Viet Nam in which the RoK took the lead; followed by Japan with US$1.229 billion (accounting for 10.8%); Singapore with US$1.129 billion (10%). The processing and manufacturing sectors drew the largest amount of FDI with 488 newly-registered projects and 405 additional-capital projects worth US$ 8.06 billion and accounting for 71.4% of total investment capital. Real estate business ranked second with 25 newly-registered projects worth US$604.8 billion. Scientific area came in third by absorbing US$562.3 million and making up 4.9% of total investment. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR