BUSINESS IN BRIEF 1/8
HDBank, Senshu Ikeda ink deal
The Housing Development Commercial Joint Stock Bank (HDBank) has signed a memorandum of understanding with Japan's Senshu Ikeda Bank to provide investment advice and financial services to its customers seeking to enter Viet Nam.
Senshu Ikeda will offer similar services to HDBank's customers seeking to set up business in Japan.
They will also organise seminars on investment and other events for each other's customers and exchange personnel.
In 2014 HDBank and Japan's Hyakugo Bank established a Japan desk to support Japanese companies in Viet Nam.
This month the Vietnamese lender together with Banrai Trading Company organised a business-matching seminar for the Vietnamese and Japanese food industries.
Zhejiang Export Fair 2016 in Ha Noi
China's Zhejiang Export Fair 2016 will be held from August 4-6 at the International Exhibition Centre in Ha Noi.
The 5th Zhejiang trade fair in Ha Noi will see the participation of nearly 100 businesses with 150 booths, Nguyen Khac Luan, general director of the Viet Nam National Trade Fair Advertising Co (Vinexad), the event's orgniser said.
The fair will focus on three prominent industry groups: machinery, electrical and electronic equipment; building materials and interior decoration; and garment, textile-materials and consumer goods, he said at a press briefing on Tuesday.
Zhejiang is a coastal province located in the southeast of China with ideal natural conditions. It posted rapid economic growth in recent years and boasts economic relations with over 230 countries and territories around the world. In 2015, the province's total export turnover reached US$347.4 billion.
Fusion Suites Saigon opens in HCM City
Fusion Suites Saigon, the latest addition to the Fusion brand of Serenity Holding, opened in HCM City yesterday.
Located in District 1, Fusion Suites Saigon is only 30 minutes away from Tan Son Nhat International Airport. It offers easy access to administrative and commercial centres and all major tourist attractions.
Following the Fusion's signature wellness philosophy, this is the first hotel in the city to include a daily spa treatment in the room rate.
The hotel has three kinds of rooms, including suite, corner suite and family suite, with a total of 71 rooms.
"Following our success of the flagship properties under Fusion Resorts and Fusion Suites in Da Nang and Nha Trang, the hotel is a strategic project and a pioneer in bringing trendsetting concepts to the city," said Marco Van Aggele, CEO of Serenity Holding.
At a press conference, the company said they would expand more hotels and resorts in other provinces and cities including Phu Quoc, Nha Trang, Vung Tau and Hoi An.
Serenity is an organisation that conceptualises, designs, builds and manages hospitality brands. Its brands are Fusion Resorts, Fusion Suites and Alma Resorts.
Conference seeks measures for economic institution reform
Scientists and experts discussed advantages and difficulties facing Vietnam during the reform of economic institution in the context of international integration in accordance with agreements that the country has signed during a conference in Hanoi on July 28.
According to Pham Van Tan, Vice President of the Vietnam Union of Science and Technology Associations (VUSTA), Vietnam has joined and concluded negotiations for 12 bilateral and multilateral free trade agreements.
In that context, Vietnam faces more competitions, especially with ASEAN countries with similar economy, he held, noting that Vietnamese labourers find it hard to compete with those from other regional countries who have better professional qualifications and skills.
Prof. Le Xuan Ba from the Vietnam Economic Science Association, asserted that the legal system, mechanisms and policies of Vietnam have been incomplete and incomprehensive, failing to match the requirements of the country’s socialist-oriented market economy.
He noted that the country’s business environment has yet to be equal and healthy, while State-owned enterprises have not well performed their roles as the key factor of the economy and the State management’s efficiency has been limited.
Prof. Ba said that along with policies to support private firms, it is crucial to strengthen the financial market structure and boost the comprehensive growth of all kinds of markets.
It is necessary to improve transparency by increasing inspection and control of negative signs and speeding up judicial and administrative reform to create a healthier environment for businesses, he said.
Meanwhile, Hoang Xuan Hoa from the Central Party Committee’s Economic Commission, emphasised the need to continue completing regulations and social standards orienting economic transactions and behaviors, while strengthening monitoring mechanisms.
Vietnam should continue to complete institutions related to ownership and development economic sectors as well as business types, he said, adding that policies to boost the growth of enterprises and the synchronous development of all kinds of market are also vital.
Industrial production index up 7.2 pct in July
The industrial production index rose 7.2 percent year-on-year in July, the General Statistics Office has announced.
During the past seven months, the manufacturing and processing sector grew 9.9 percent, electricity manufacturing and distribution rose 11.6 percent, water supply and wastewater treatment up 7 percent while the mining sector dropped 2.7 percent.
Industrial products, including television, steel, automobiles and animal feed posted significant growth while apparel, coal, motorbikes, footwear, sugar and crude oil experienced slight increases or decreases.
Hai Phong, Can Tho, Da Nang cites and Thai Nguyen, Quang Nam, Bac Ninh, Binh Duong and Dong Nai provinces recorded expanded scale of industrial manufacturing.
The consumption index of the processing and manufacturing sector increased 6 percent annually in the first half of this year.
As of July 1, the inventory index rose 9.2 percent from the same period last year, lower than a 10.3 percent increase recorded in 2015.
The inventory rate in January-June reached 70 percent, mostly motorised vehicles, electronics, computers and paper products.
The number of workers in industrial firms went up 5.3 percent year-on-year as of July 1, especially in Thai Nguyen, Hai Phong, Vinh Phuc, Binh Duong, Ba Ria-Vung Tau, Hanoi, Ho Chi Minh City, Can Tho and Quang Ngai.
Vietnam Motor Show 2016 to return to Hanoi
The Vietnam Motor Show (VMS) 2016, the 12 th of its kind, will return to Hanoi on October 5-9, according to the Vietnam Association of Manufacturers of Automobiles (VAMA).
After three consecutive shows in Ho Chi Minh City, the event’s return proves the importance of Hanoi and northern localities, which account for more than 46 percent of the total market share.
On a space of 11,000 sq.m, visitors are able to experience the latest automobile models by 13 brands from 11 VAMA members, and buy them at preferential prices.
As the first and largest motor show in Vietnam, VMS was held in Hanoi for the first time in 2005.
Vietnam sold a total of 244,914 cars in 2015, an annual increase of 55 percent, according to VAMA.
Vietnam exports mangoes to Australia
Vietnam will export close to 18 tonnes of mangoes to Australia on a daily basis in the coming time as part of the agreements reached between the Suoi Lon Mango Cooperative in the southern province of Dong Nai and Australian partners.
Director of the cooperative Nguyen The Bao said the negotiations with Australian importers were conducted from May 2016, and so far the sides have agreed on material areas, production stages, and prices.
Australia will transfer preservation technology to the cooperative on a trial basis. This aims to ensure the fruits are free from toxic substances.
Australia is buying mangoes from Thailand and Mexico. However, it will purchase more mangoes from the Vietnamese cooperative to meet the local increasing demand during the period from mid-March to late-May annually, he noted.
Prices of export mangoes will be higher than that of domestic market. The shipment will be carried out via air and sea routes.
The Suoi Lon Mango Cooperative has 150 hectares of mangoes, including nearly 25 hectares meeting the Vietnam Good Agricultural Practice (VietGAP) and Global Good Agricultural Practice (GlobalGAP) standards. Each season could harvest over 4,500 tonnes of fruits.
In the coming time, the growing area will be expanded to 270 hectares, he said, adding that the cooperative has limited the use of plant protection products while increasing the use of micro-organic fertiliser to create clean and safe products.
Apart from Australia , the cooperative is exporting around 2,000 tonnes of mangoes to Japan.
Reforms needed to take advantage of FTAs
The legal system, mechanisms and policies of Vietnam have been incomplete and incomprehensive, failing to match the requirements of the country's socialist-oriented market economy, said Le Xuan Ba from Viet Nam Economic Sciences at a forum in Ha Noi yesterday.
The forum of the Viet Nam Union of Science and Technology Associations (VUSTA) was convened to collect ideas from business experts and researchers about the institutional reform required to boost the local economy in the context of the 12 FTAs the country has signed.
According to the forum, the FTAs have so far contributed to improving the economy, with foreign direct investment (FDI) reaching US$22.75 billion in 2015 and.more than $11.2 billion in the first half this year.
However, Ba believes the business environment in Viet Nam is not sufficiently healthy, while many State-owned enterprises have not performed well and many private enterprises are weak.
He said that along with policies to support private firms, it is crucial to strengthen the financial market structure and boost the comprehensive growth of all kinds of markets.
Ba told the forum that the country should enhance transparency, improve inspections to identify flaws, boost judicial and public administration reform as well as improve the investment climate.
Pham Van Tan, deputy head of VUSTA, said many market laws are still not fully applied making it hard for Viet Nam to compete with other similar ASEAN economies that have better technology, more skilled labour and stronger capital.
Hoang Xuan Hoa, director of the general economics department of the Central Party Committee's Economic Commission said the country should continue to improve the regulation systems and reform the institutions.
Viet Nam should continue to complete institutions related to ownership and development economic sectors as well as business types, he said, adding that policies to boost the growth of enterprises and the synchronous development of all kinds of market are also vital, Hoa said.
Viet Nam has economic relation with 224 countries and territories. According to the Viet Nam Chamber of Commerce and Industry (VCCI), 12 signed FTAs including the TPP, ASEAN, ASEAN-India, ASEAN-Australia/New Zealand, ASEAN-Korea, ASEAN-Japan, ASEAN-China, Viet Nam-Japan, Viet Nam-Chile, Viet Nam–Korea, Viet Nam-Eurasian Economic Union, Viet Nam-EU.
VCCI said Viet Nam was waiting for RCEP (ASEAN+6), Viet Nam-Israel and Viet Nam-EFTA.
Firms urged to sell VN products
The role of firms remained critical in expanding points of sales and building a solid distribution foothold in rural markets where local residents had a thirst for locally-produced goods, according to the Ministry of Industry and Trade (MoIT).
While bringing Vietnamese products to rural areas was a major programme in the campaign "Vietnamese give priority to using Vietnamese goods", the ministry said the organisation of sales were not regular, making it difficult for consumers in rural areas to buy made-in-Viet Nam products. So, the efficiency of the programme was below expectation.
Firms still did not attach large significance to rural markets due to the weaker purchasing power in these areas coupled with a shortage of capital to develop the distribution system.
As price was a major concern of consumers in rural areas, Vietnamese products faced severe competition from cheaper products of unclear origins that remained rampant in rural areas, a representative from retailer Hapro said.
Hapro said that purchasing power was still low and its revenues from bringing Vietnamese products to rural areas last year dropped by around 20 per cent compared to the previous year.
Experts also said that it would take time to increase the awareness of consumers in rural areas about benefits of using made-in-Viet Nam products and to form a habit of using locally produced goods.
Policies to encourage firms to develop retail channels in rural areas were needed, experts said, adding that firms should pay more attention to rural, mountainous and remote markets as this would not only promote the distribution of their products but also create jobs for local labourers.
Chairman of Ha Noi Supermarket Association Vu Vinh Phu said firms should join hands with local traders to put their goods on shelves at traditional markets or groceries. "Connecting with local traders will be a good idea for firms to expand their point-of-sale system in rural areas, especially remote areas where access to Vietnamese quality products remained limited."
MoIT's statistics revealed that there were more than 9,000 traditional markets in Viet Nam which distributed some 80 per cent of goods to local consumers, making traditional markets a useful retail channel to distribute Vietnamese products.
MoIT deputy minister Do Thang Hai said that efforts in fighting smuggled and counterfeit products must also be strengthened to pave the way for promoting the consumption of Vietnamese products.
According to the Steering Committee of the "Vietnamese give priority to using Vietnamese goods" campaign, more than 2,200 sales were organised in rural areas during the past six years.
Dream House to up stake in mineral firm
The board of directors of Dream House Investment Corporation (DRH) has approved a plan raising its stakes in Binh Duong Mineral & Construction Co (KSB) to at least 51 per cent, the company announced Wednesday.
The firm holds 20.2 per cent of the charter capital of Binh Duong mineral company. It would buy shares to raise its holdings at a suitable time, the company said.
Dream House Co made the first investment in Binh Duong mineral company in March 2016 when it spent about VND100 billion (US$4.5 million) to acquire almost 10 per cent of the mineral company.
Phan Tan Dat, CEO of Dream House Co, said this was not only a pure financial investment but the company wanted to make use of construction material, including brick and stone, of Binh Duong Mineral Co for real estate projects.
The company made other two share purchases in May and June, raising its holdings in Binh Duong Mineral Co to a total of 20.2 per cent of its charter capital on July 1. Total funds that Dream House has spent on this acquisition reached VND260 billion.
KSB shares yielded one of the best returns in 2015 when its price soared over 68 per cent, from VND21,300 to over VND37,000 by the end of last year. Its price continued to skyrocket in the first half of this year, after the State Capital Investment Corporation announced its total divestment of over 50 per cent from Binh Duong Mineral Co in February.
High car sales, disappointing profits
Automobile companies have seen profits down since the beginning of this year despite robust car sales in the domestic market.
Five listed auto companies on the two stock exchanges reported combined profits of VND271 billion (US$12.2 million) in the first half of 2016, a drop of 56.4 per cent from the same period last year.
Four of the five reported lower profits in the first six months, with Hoang Huy Investment Services Co (HHS) posting the largest year-on-year decline of 75.6 per cent, down from VND336 billion in 2015 to VND82 billion in 2016.
TMT Motors Corporation (TMT) also saw its profits fall significantly to VND47 billion in the first six months of this year, down 66 per cent year-on-year.
First-half profits of two other companies, Truong Long Auto & Technology Co (HTL) and Sai Gon General Service Corp (SVC), were also down 36.3 per cent and 1.4 per cent, respectively.
Only Hang Xanh Motors Service Co (HAX) saw its six-month profits inch up 2.1 per cent to reach VND33.4 billion.
Hoang Huy explained that the company was focusing its investments on manufacturing new products, while other firms said higher discounts offered to their dealers pushed up sales costs.
According to the Vietnam Automobile Manufacturers' Association (VAMA), car sales grew 31 per cent in the first half of 2016.
The high increase was attributed to strong purchasing demand ahead of the adjustment in special consumption tax on cars, which went into effect on July 1, 2016.
Along with slumps in profits, share prices of most automobile companies have tumbled between 10 and 44 per cent, except for the shares of Hang Xanh Co (HAX), which rose 8 per cent since the beginning of the year.
New firms surge in first seven months
Some 64,000 enterprises were created in the first seven months of this year with a total registered capital of nearly 497 trillion VND (22.36 billion USD), according to statistics from the General Statistics Office.
Newly-established firms rose by 23.3 percent in number and 54.7 percent in capital value year-on-year.
The adjusted capital in the reviewed period posted 894.9 trillion VND (40.27 billion USD), raising the total registered and adjusted capital to 1,400 trillion VND (63 billion USD).
More than 16,700 enterprises, which suspended their activities due to difficulties, have resumed operations, up 67.5 percent from the same period last year.
In July, the number of new firms exceeded 9,600 with a total registered capital of 69.2 trillion VND (3.11 billion USD), a slight decrease from June.
99,200 jobs were also created by the newly-established enterprises.
The number of businesses resuming operations exceeded 1,800 in July, while nearly 6,000 halted their operation and more than 900 firms completed procedures for dissolution or termination.
Can Tho targets 1.65 bln USD in export, foreign currency service
Export and foreign currency services are expected to bring 1.65 billion USD for Mekong delta Can Tho city this year, according to the city’s Department of Industry and Trade.
The figure will include 300 million USD sourced from foreign currency services.
The department reported that the city has earned 891.2 million USD from export and foreign currency services in the first seven months, of which exports contributed 686.2 million USD.
Meeting on July 28, the municipal authorities asked relevant agencies to double efforts to speed up projects processing commodities for export, especially those on footwear, and apparel.
According to Nguyen Minh Toai, Director of the Department for Industry and Trade, rice exporters have secured more orders since early July, which are expected to gain rises in both volume and value of export rice.
Nguyen Ngoc He, Director of the Department of Agriculture and Rural Development, said the city’s fruit tree area increased to 15,800 hectares, providing enough material for processing for export.
Truong Quang Hoai Nam, Vice Chairman of the municipal People’s Committee, said the city would implement measures to boost exports, including developing logistics.
BIDV wins dual Asian Banking and Finance awards
The Bank for Investment and Development of Vietnam (BIDV) has won the Vietnam Domestic Technology and Operations Bank of the Year and Social Media Initiative of the Year awards at the Asian Banking and Finance Awards.
The awards were judged by a panel of experts from leading financial firms such as Deloite, Ernst and Young Advisory LLP, KPMG, and Pricewaterhouse Cooper.
It was the second consecutive year BIDV won the Vietnam Domestic Technology and Operations Bank of the Year title thanks to a project integrating the IT systems of BIDV and Mekong Housing Bank after the banks merged last year.
The integration was performed in only four months, the shortest time ever recorded for a banking merger in Vietnam.
In addition, BIDV is a pioneer in using social media to deliver its services to customers with the launch of the Social Media Command Centre in 2015.
The Social Media Initiative of the Year was the third social media-related award the bank received over the last year after the Best Social Media Team at CMO Asia Awards and the Excellence in Social Media at Retail Banker International Awards.
An Giang promotes sustainable tourism
The Mekong Delta province of An Giang has doubled efforts to develop green and sustainable tourism.
Since early this year, the locality has boosted cooperation in tourism in the Southwestern key economic zone, including Can Tho City, Soc Trang, Bac Lieu, Ca Mau, and Kien Giang provinces.
It has also offered more tourism packages within the Mekong Delta region.
The province has also connected with Cambodian localities, namely PhnomPenh, Shihanouk Ville and Takeo and Kandal provinces to boost tourism across the border gates of Tinh Bien in Tinh Bien district and Vinh Xuong in Tan Chau town.
Service quality and environmental protection have also been improved, while training courses on food safety have been held for nearly 1,000 service providers.
An Giang has 82 special national, national and provincial heritages, including Ba Chua Xu Nui Xam Temple in Chau Doc district, Nui Cam (mountain), Tra Su Cajuput Forest in Tinh Bien district, and the Oc Eo Culure relic site in Thoai Son district.
According to Pham The Trieu, Deputy Director of the provincial Department of Culture, Sports and Tourism, multiple new products have been developed to attract tourists to the locality.
The provincial People’s Committee has approved a programme to promote sustainable tourism from 2016-2020, with a focus on applying information technology in advertising tourist products.
The programme will focus on improving service quality to enhance competitiveness.
Priority will also be given to ensuring sustainable use of natural resources in developing tourism.
Over the past seven months, An Giang has lured 6 million foreign and domestic tourists and earned 1,290 billion VND (58 million USD).
Foreign investors spend nearly US$3 billion on buying corporate shares
In the past year, 3,141 foreign investors have bought US$2.948 billion shares of Vietnam companies, according to Foreign Investment Agency under the Ministry of Planning and Investment.
From July 1 last year to July this year , foreign investors contributed capital to or bought shares worth US$1.894 billion from 1,709 businesses. The figures for the first seven months were US$1.512 billion and 1,284 businesses, respectively.
Real estate was the first priority of foreign investors who contributed US$350.1 million to 33 businesses. This accounts for 23.1% of their total capital contribution.
Retail and wholesale trade came second with 57 projects with US$318.9 million, followed by air transport, and plastic product manufacturing.
In the first seven months, investors from 65 countries and territories contributed capital and bought shares in Vietnam. Singapore took the lead with 107 projects valuing at US$488.4 million, trailed by the Republic of Korea with 331 projects (US$321 million), Japan (US$157 million), Taiwan (US$130.8 million) and China (US$65.8 million).
D-Link International grows presence in Vietnam
The global leading networking solutions company, D-Link International Pte Ltd, just appointed Thuy Linh International Trade Co., Ltd. their new distributor in Vietnam, forming another strategic partnership apart from their partnership with Viscom JSC.
Established in 2000 as a provider for hardware solutions in Vietnam’s IT industry, Thuy Link has been one of the key distributing partners for numerous world leading IT hardware brands to reach out to the various markets.
In addition to be able to offer D-Link’s wide range of award-winning and innovative networking solutions to the market in which it currently operates, this partnership will support the goal to provide seamless, fast and reliable online experience in a connected environment for consumers and businesses in Vietnam.
“With Vietnam’s steady economic growth at near 7% this year, rising disposable incomes and upward trend of internet usage on social, digital and mobile platform, D-Link aims to become the No. 1 trusted networking brand that builds the network for everyone,” said Christopher Neo, sales director of D-Link in Vietnam and Philippines.
“Our new partnership will bring about the opportunity for the resellers and service providers under Thuy Linh Co., Ltd to build and grow sustainable and profitable businesses. At the same time, D-Link will be able to reach out to more consumers and SMEs through Thuy Linh’s channel success,” Neo added.
D-Link also showcases their award-winning consumer product range that includes their AC-technology premium products, 180-degree IP cameras, powerline, range extenders and 4G products.
Consumers will unleash themselves from cables and surf the web throughout their home or small office, enjoying high-speed wireless performance and turn their home into a smart environment.
On top of that, they also introduce their SME networking solutions that deliver best-in-class performance – switching, wireless, security, surveillance, storage and management.
Offering standardised technology with industry leading functionality integrated into highly flexible, highly reliable and highly secured solutions that are easy to implement and cost effective, D-Link aims to provide complete end-to-end networking solutions for more than 400,000 SMEs in Vietnam who are the engine of growth in the country.
Agriculture-exporting Vietnam still relies heavily on imports
Even though Vietnam is an agricultural country with 80% of its population living in rural areas, the Southeast Asian country spends several billion dollars every year importing agricultural products.
Statistics show that the Vietnamese have been importing peanuts for several years, primarily from India, Senegal, and China.
According to numbers from the General Department of Vietnam Customs, Vietnam has imported 12,000 metric tons of peanuts over the last six months.
In 2015, Vietnam imported 35,000 metric tons, a 146% increase compared to 23,000 metric tons in 2014.
Surprisingly, China has been Vietnam’s number-one source of peanut imports in the last three years, but peanuts are still being exported the other way round every harvest season.
The price of peanuts that Vietnam imports from China is unexpectedly cheap, only VND5,500 to VND6,000 a kg, relative to the rate of those shipped from other countries, which are around VND15,000 to VND22,000 (US$1) a kg.
The price of peanuts imported from China into Vietnam is also much lower than that of peanuts exported from Vietnam to China.
According to peanut traders in the north-central and Central Highlands regions, the price of peanuts exported to China has always stayed above VND30,000 (US$1.36) a kg in the last three years.
“I cannot understand how [Chinese traders] bought peanuts at such a high price from Vietnam and shipped them back to the country at extremely cheap prices, even cheaper than unprocessed peanuts in Vietnam,” a Vietnamese trader said, expressing his surprise upon hearing of how cheap peanuts from China are sold to Vietnam.
According to the Ministry of Industry and Trade, peanuts are imported primarily for use in the snack food industry.
Due to the industry’s high speed of growth, the Ministry of Industry and Trade predicted that peanut imports will rise in the future.
The US Department of Agriculture said in a report that the area of peanut-growing land in Vietnam is only around 220,000 ha, with an output of 550,000 metric tons a year, merely meeting 75% of demand.
The importation of peanuts will most likely be above 200,000 metric tons in the coming years.
Peanuts are not the only agricultural products imported into Vietnam.
According to the Ministry of Agriculture and Rural Development, Vietnam has imported more than 1.87 million metric tons of wheat at a cost of US$398 million during the first seven months of 2016, a 37.4% year-on-year increase.
In the same period, Vietnamese businesses have also imported 582,000 metric tons of cashew nuts, mainly from Africa.
According to the Vietnam Cashew Association, Vietnamese factories can currently process 1.3 million tons of cashew nuts a year, while the number of domestically-produced raw cashews can only meet 30% to 40% of demand.
Therefore, Vietnamese businesses have to import cashew nuts in order to keep up with the capacity of their factories.
Similarly, businesses that process fishing products are importing raw materials from foreign countries.
In the first seven months of 2016, fishery businesses have imported almost US$600 million worth of raw materials.
Vietnamese businesses also spend several billion dollars on materials and products for the livestock industry, importing US$1.85 billion worth of animal feed and raw materials in the first seven months of 2016.
Compared to the value of rice exports in the same period, that of animal feed exported is US$500 million higher.
In the first seven months of 2016, Vietnam has also bought over 800,000 metric tons of soybeans and 3.8 million metric tons of corn in order to produce animal feed.
Le Ba Lich, president of the Vietnam Animal Feed Association, said that Vietnamese dependence on foreign countries for animal feed has been flagged for a long time, but, up until now, there has not been an effective solution.
According to experts, the policy of prioritizing rice over other agricultural produce in the last few years has led to a situation in which Vietnam, having become one of the top global exporters of rice, is unable to meet domestic demand for other agro-produce, such as peanuts, soybeans, and corn, and forced to purchase these from other countries.
“Vietnamese soybean supply is not even enough to make tofu, so firms have had to import soybeans to produce cooking oil, soymilk, and animal feed. Corn and peanuts are in the same situation. Without careful investment, output is low and prices are high, so businesses are forced to import everything,” Lich lamented.
Pham Duc Binh, managing director of Thanh Binh JSC, said that domestic raw materials for animal feed are often low in supply and more expensive.
Meanwhile, raw materials imported from foreign countries can be sourced at a far cheaper price than that of domestic raw materials. Businesses have no other choice but to import.
For example, according to Binh, the price of domestic corn on July 26 was VND7,000 a kg, while that of imports was only VND5,800-VND6,000 a kg, with supply always ready.
A company specializing in importing animal feed in Ho Chi Minh City stated that prices of imported goods delivered in August and September are especially cheap.
More specifically, soybeans imported from the US in August and September fetch only around US$450 to US$455 a metric ton, or VND10,000 a kg, only half the price of domestic soybeans.
Binh said that countries such as the US, Brazil, or Argentina have extensive land, a highly-developed agricultural plant research sector, and highly-advanced farming methods, all of which has contributed to the low price of their agricultural products.
“There needs to be an effective policy in order to develop the domestic raw material sector so that it can compete with imports, but one should not be unreasonably averse to imported goods,” Binh advised.
AIA delivers excellent growth in the first half of 2016
AIA Group Limited, the largest independent publicly listed pan-Asian life insurer, just released its unaudited consolidated results for the six months ended May 32, 2016.
Accordingly, the company posted a record growth of 37 per cent in the value of new business (VONB) to $1.26 billion on a constant exchange rate basis. The VONB margin inched up 2.4 percentage points to 52.7 per cent.
The annualised new premium jumped 31 per cent to $2.35 billion.
AIA also witnessed strong operating profit growth during the period: the embedded value operating profit up 28 per cent to $2.89 billion, after-tax profit up 14 per cent to $1.95 billion and earnings per share up 14 per cent to $16.3 US cents based on the International Financial Reporting System (IFRS) standards.
The company’s Board of Directors has declared a 17 per cent increase in the interim dividend for 2016.
“AIA has delivered an excellent set of results in the first half. This has enabled us to deliver a strong and consistent track record of year-on-year growth notwithstanding an uncertain global macroeconomic and capital market environment,” said Mark Tucker, AIA Group chief executive and president.
“Asia is the most attractive and dynamic region in the world for life insurance. We shall continue to find innovative ways to broaden our range of products and provide customers with the critically important protection and savings support they need,” Tucker affirmed.
“This outstanding result has proven the effectiveness of AIA’s strategies at regional and country level, and demonstrated the positive prospect of life insurance industry in Asia Pacific.
“This year AIA Vietnam continues to mark our contribution to the group’s achievement with our strong growth and successful implementation of the group’s strategies and initiatives, specifically with our strategic focus in agency network development and bank partnership,” said Wayne Besant, CEO of AIA Vietnam.
Singapore and Vietnam promote investment ties
The trading and investment relationship between Vietnamese and Singaporean businesses has much room to develop, which will be addressed in the coming time.
“Singapore has the edge in capital and technology, while Vietnam has natural and human resources, which is a heaven-sent match to improve trading and investment between our/the two countries,” said Dang Xuan Quang, deputy director of the Foreign Investment Department under the Ministry of Planning and Investment at the Vietnam – Singapore Business Forum 2016 (VSBF) in Ho Chi Minh City last week.
More than 200 business leaders, government representatives, and experts met at the forum to discuss ways to strengthen trade and investment, especially in light of the two countries joining the Trans-Pacific Partnership (TPP) and the ASEAN Economic Community (AEC).
“Vietnam is now an attractive destination for foreign direct investment (FDI). In the first half of this year, the country saw the total newly registered and expanded capital of $11.3 billion, an increase of 105.4 per cent compared to the same period of last year,” Quang said.
The first half of the year also saw more than $7.25 billion in FDI being disbursed in the country. This figure is expected to reach $15 billion by the end of this year, a record-high in Vietnam so far.
“Vietnam is given priority in the fields of high tech and environmental protection. We have also issued a separate decree to regulate private-public partnerships, to encourage the private sector to invest in infrastructure development,” Quang told the forum’s participants.
According to VCCI’s Deputy Chairman Doan Duy Khuong, VSBF is a practical platform for businesses to promote international economic integration, since both countries have become members of the TPP and AEC.
Business lines found exciting by enterprises from the two countries were also discussed, such as financial services, manufacturing and processing, real estate development as well as tourism, and hotel development.
Leow Siu Lin, Singaporean consul in Ho Chi Minh City, said that Vietnam remained one of the top investment destinations for Singaporean companies.
“Singaporean businesses take a long-term approach when making foreign investments and acknowledge Vietnam’s strong foundations, which include a demographic advantage, given its young, skilled, and growing labour force and rich endowment of arable land, mineral wealth, and oil and gas resources,” Lin added.
Koh Chong Yu, director of International Enterprise Singapore in Ho Chi Minh City, added that not only Singaporean enterprises focus on the Vietnamese market, but international groups headquartered in Singapore were also looking for investment opportunities in the region, including Vietnam.
“Singaporean enterprises are willing to cooperate with Vietnamese partners in different sectors, such as services, oil and gas, and tourism—all of which contain incredible potential. They [Singapore enterprises] are also keen to support Vietnamese enterprises in integrating into the global supply chain, especially now that the two countries joined the TPP,” Yu confirmed.
As of April 2016, Singapore was the third largest investor in Vietnam, after South Korea and Japan, with a cumulative investment volume of $36.3 billion disbursed in more than 1,600 projects.
The key investment areas are services (ports, logistics, and healthcare), manufacturing, industry, and real estate.
“Many of our companies, such as Sembcorp, Mapletree, Keppel Land, Ascendas, and CapitaLand, to name but a few, have longstanding investments in Vietnam and continue to look for opportunities to expand their operations,“ said Lin.
Transport Department proposes cargo restriction to Cat Lai port
The Ho Chi Minh City Department of Transport on Thursday proposed to restrict the volume of goods transported to Cat Lai port as one of urgent measures to reduce traffic congestion in approach streets to the port.
The proposal was made at a meeting between director of the department Bui Xuan Cuong and the city Police Department, District 2 and the port management.
According to the Transport Department, other immediate solutions are to extend the docking period of vessels at the port; encourage customers to directly deliver and receive goods at Cai Mep Port in the neighboring province of Ba Ria-Vung Tau instead of transferring to Cat Lai.
In addition, related sides should provide package cargo transport service from Hiep Phuoc Port in Nha Be district to customers’ warehouses instead of transiting Cat Lai port. Besides, they should also work with customs agency to create a flexible mechanism for direct goods delivery and pickup at Hiep Phuoc and Cai Mep.
Police forces are proposed to strictly handle container trucks committing parking violations along approach roads and increase traffic regulation in the port area.
In long term, the Department of Transport will work with Vietnam Expressway Corporation to hand over a approach road from the port to the HCMC-Long Thanh-Dau Giay expressway. The road stretches from An Phu Intersection to the eastern belt road in District 9, HCMC.
On the other hand, they will establish a plan to improve trafficability in An Phu Intersection, speed up the progress of works in Cat Lai port's area, build My Thuy intersection and Cat Lai Bridge, and upgrade the eastern belt road, Nguyen Duy Trinh and Nguyen Thi Dinh streets.
Financial proof rule relaxed for air transport firms
Companies seeking an air transport license can now use their audited financial reports to provide proof of their financial situations, instead of confirmations by banks, according to a new decree.
The Government’s Decree 92/2016 ND-CP issued on July 1 says enterprises in the civil aviation sector that want to add new business activities are not required to produce banks’ confirmations. They can now choose to submit their two latest annual financial reports to apply for a new license.
The liberal rule came out after Vietstar Airlines was caught in technicalities earlier this year when it sought an air transport license.
The Ministry of Transport in March wrote to the Government proposing an exception. The ministry said the carrier should be allowed to use its financial reports as evidence of its chartered capital. At the time, its chartered capital was only VND625.7 billion (US$28.06 million), compared to the required level of VND700 billion as regulated by Government Decree 30/2013.
The Government turned down the request, insisting a bank confirmation was a must.
It is not immediately clear why the ministry has proposed easing business requirements for air transport.
Decree 92 also has more specific regulations regarding aviation firms with foreign direct investment (FDI). Particularly, foreign capital must account for no more than 30% of a firm’s chartered capital and there must be at least a Vietnamese individual or entity holding a majority stake. Foreign holdings in the Vietnamese entity, if any, must not exceed 49% of an entity’s chartered capital.
If air transport firms without foreign investment want to transfer their stake to foreign investors, the transfer could only proceed after two years.
HSBC projects OMO rate to stay at 5% until H1 next year
HSBC Bank has predicted that the State Bank of Vietnam would keep the open market operations (OMO) rate unchanged at 5% through the first half of 2017 as there is still a risk that inflation may overshoot the official target of 5% this year.
According to the bank, the Nikkei Purchasing Managers Index (PMI) continued to reflect improvement in the operating conditions of the sector, but the pace of expansion moderated marginally to 52.6 in June, from 52.7 in May.
The new orders index mirrored this trend, but new export orders advanced to a 14-month high while output growth quickened to an 11-month high. Higher output led to higher employment and increased purchasing activity, HSBC said in its Asia economics report released on July 27.
Notably, foreign direct investment (FDI) inflows more than doubled to over US$11 billion in the first half of 2016, compared to the same period last year. Manufacturing and processing industries accounted for about 70% of the total registered FDI.
The headline consumer price index (CPI) continued to pick up in June, rising 2.4% year-on-year from 2.3% in May. The uptick was driven significantly by increased demand of certain food items.
There were mass fish deaths along the central coastal areas of the country two months ago. Worried that poison or toxins might be behind the abnormal fish deaths, consumers bought less fish and more poultry and meat. Prolonged hot weather and drought also reduced vegetable supplies.
Meanwhile, the inflation target of 5% in 2016 could be missed. Higher costs of key services like healthcare and education, adverse weather conditions, higher global oil prices and expected gains in credit growth pose upside risks to inflation. Therefore, the central bank will keep the OMO rate unchanged through the first half of 2017.
According to the report, the aftermath of the June 23 referendum, where the UK voted to leave the European Union (EU), is still unfolding. Currency markets were the first to feel the jitters, with the pound weakening immediately along with sentiment.
However, HSBC said the Asian economies are likely to withstand market volatility as a result of Brexit, as the fundamental and economic dependence on the EU is not only small but is trending lower. Even if Brexit-related uncertainties take a toll on Asian economies, officials in the region still retain some policy options to cushion the impact.
Further, HSBC’s U.S. economist Kevin Logan expects no Federal Reserve (Fed) rate hike this year and has lowered his 2017 U.S. gross domestic product (GDP) forecast to 1.9% from 2.2%. This might have wider implications worldwide and is likely to impact the Asian countries also, as a slowdown in developed markets may dampen external demand further.
HSBC still lowered its 2017 growth forecasts for Asia ex-Japan by 0.2 percentage point. Two major channels through which the imminent Brexit can affect Asian economies are trade and investment.