BUSINESS NEWS IN BRIEF
Measures proposed to turn household businesses into firms
Attendees at a recent review conference of the HCMC Tax Department suggested a number of measures for turning household businesses into firms.
To boost the transformation, tax offices should not sell blank invoices to family-run businesses that use these papers frequently.
Le Tan An, vice chairman of District 6, which is home to a large number of household businesses, told the conference that the country lacks of strict regulations that force such businesses to convert into companies.
According to the Enterprise Law, a family-run business which has 10 staff or above must register as an enterprise. However, the level of compliance with the rule is low due to rare inspections into employment and business owners’ poor awareness.
An proposed blank invoices be sold to enterprises only. This means family-run businesses are not allowed to use invoices and they must register as companies if they want to do so.
He proposed competent agencies permit business registration at a district-level economic division to ease overload at the municipal Department of Planning and Investment and support household businesses.
Tran Ngoc Tam, director of the HCMC Tax Department, told local media recently that except for small-scale household businesses, bigger ones that frequently buy blank invoices must be turned into enterprises. A company can issue invoices itself and must pay taxes.
HCMC leaders in the past have ordered district authorities to persuade family-run businesses to upgrade themselves into firms to make tax declarations and payments transparent. There is a high possibility of tax losses although their tax payments account for a small proportion of total tax revenues.
The conversion of more family-run businesses into enterprises will make it possible for HCMC to have an additional 50,000 firms this year and a total of 500,000 by 2020.
Tam said the tax department pledged to back firms, especially startups, and would adopt measures to make sure that all businesses receive adequate information about tax procedures.
According to the prevailing regulations, household businesses pay an annual presumptive tax based on their estimated revenues with the taxman’s prior approval. They can buy blank invoices from tax offices and for each invoice issued from early last year, they pay a 1.5% tax.
Data showed HCMC has 296,836 household businesses at present with 1,182 of them employing more than 10 people each.
Bac Ninh kicks off gems and jewellery expo
Bac Ninh’s provincial Association of Small and Medium-Sized Enterprises opened the Gemstone, Jewellery and Art Gemstone Fair on February 8 in Kinh Bac Cultural Centre, Bac Ninh Province.
The event features the participation of organising and enterprising members of the Vietnam Gemstones, Jewellery and Handicraft Association from ten provinces and cities across the country.
Thousands of types of gemstones and gemstone artworks were displayed at 90 booths at the event. Artworks introduced at the exhibition are made from natural gemstones in Vietnam like ruby, sapphire, spine, peridot, tourmaline, quartz and opal.
The event is one of the activities marking the 185th anniversary of the establishment of Bac Ninh Province and 20th anniversary of its re-establishment. The expo also offered visitors a chance to contemplate gemstones and gemstone artworks.
On the occasion, 30 gemstone artworks were to go under the hammer to raise money for a provincial charity fund. The organising board collected over VND 340 million the auction.
The expo will run until February 16.
Boosting sustainable development of support industry
Several of Vietnam’s important industrial sectors have yet to be paid due attention or have been invested in in an over-diversified or unplanned manner, resulting in low added value to the economy. There is no other way for Vietnam to develop a sustainable industry than to promote the support industry, which is the basis for the sustainable development and growth of Vietnam’s industries.
During the past 20 years, Vietnam has approached foreign direct investment (FDI) capital under favourable conditions. However, Vietnamese enterprises have missed great opportunities from large FDI inflows in terms of the absorption and acquirement of technology from FDI enterprises.
The reason for this is that Vietnam has a weak and underdeveloped support industry, in addition to the modest number of Vietnamese enterprises participating in the support industry who are mainly involved in outsourcing work.
According to the Ministry of Industry and Trade, the capacity and technology of a majority of Vietnamese enterprises in the support industry is limited. Domestic enterprises are capable of meeting only 10% of domestic demand for support industry products which are components and simple materials with low value. Most of them have yet to approach and meet the demands of support industry products with high technology content.
There is a big gap between the demand of multinational corporations and the production capacity of domestic enterprises. Some Vietnamese enterprises have participated in supplying support industry products, but they have only paid attention to expanding its scale but not its technology.
In addition, domestic suppliers and FDI enterprises have limited information about each other’s demands. The relationship between Vietnamese enterprises is also loose, which is very necessary for enhancing the competitiveness and competitive advantages.
In many countries, relationships between enterprises can be established through the development of industrial clusters. However, the establishment of industrial clusters in Vietnam is lacking in planning, with the main purpose being to clear land for production rather than creating relationships between enterprises.
Vietnamese enterprises, who want to participate in the production chains of multinational corporations, must meet the three requirements of stable quality, timely delivery and reasonable prices. However, few domestic enterprises can satisfy all of these requirements.
The Vietnamese Government has issued Decision No.68/QD-TTg on the development programme of the support industry from 2016, creating a premise and plans for the development of the country’s support industry.
Under the programme, products from the support industry are expected to meet 45% of domestic production by 2020 and 65% of domestic production by 2025, contributing to creating more jobs, increasing income and reducing the prices of several industrial products including automobiles, garments and textiles, footwear and electronic equipment and the prices of related services such as logistics and transportation.
The development of the support industry will also provide Vietnamese enterprises with opportunities to apply international standards and modern quality management systems in production and the chance to join the global supply chain.
Vietnam's import-export revenue tripled after 10 years of joining WTO
The import and export activities of Vietnam have seen many changes after a decade of being a member of the World Trade Organisation (WTO) with import-export revenue increasing threefold compared to 2007.
According to the Vietnamese Customs office, the total import-export revenue of Vietnam in the first year of joining the WTO rose by 31.3% compared to 2006. After ten years, the import-export revenue climbed to US$350.7 billion, over three times higher than the number reported in 2007.
In addition, Vietnam's balance of trade shifted from large deficit in the 2006-2011 period to surplus or small deficit in recent years.
The structure of import and export goods also saw positive changes with the decrease in the proportion of agricultural products, fuel and minerals and the rise in the import of raw materials for production, machinery, and components.
The development of Vietnam's foreign trade was also demonstrated through the global ranking of trade transactions over the past years. In 2006, the Vietnam's export and import of goods ranked 50th and 44th respectively worldwide and in 2015, the export of goods climbed to 27th while the import ranked 28th among countries and territories across the world.
Among ASEAN countries, Vietnam surpassed Indonesia to rank 4th in terms of import and export revenue in 2015.
HCMC determined to prevent bubble in realty market
Deputy Chairman of Ho Chi Minh City People’s Committee Le Van Khoa said that city authorities have been attempting to prevent housing bubble at a meeting with the Department of Construct on February 8.
Deputy Chairman Khoa stressed that as per the Party’s resolution, the urban renewal will include residential block development and creating new quarters, re-building old buildings, and providing accommodation for those who are living along canals.
Housing development will be controlled by urban market mechanism and the government. The government will closer monitor the real estate market on the base of the regulation as well as facilitate property developer and call for social contribution with the aim to build new face for the city.
Mr. Khoa added the Department must manage not to occur bubble in the realty market.
Realty bubble just occurs, Mr. Khoa said, when economy develop dramatically in a short time leading to increase on shares; a part of rich people pour money into realty. The second factor leading realty bubble as per Mr. Khoa is that policies on finance and credit is loose and investors can ask for loans easily who go into bankruptcy later leaving bad debt.
The final factor causing realty bubble is that the rate of secondary investors who purchase to resell, is 60 percent.
The Department and district administrations must manage the demand and supply balance to curb the possible bubble. Currently, the city has abundant deluxe condos while it lacks cheap apartments. The Department and related agencies must adjust this, said Mr. Khoa.
Construction Department Director Tran Trong Tuan said that its realty project research is complete which will be submitted to the municipal People’s Committee soon. As per the Ho Chi Minh City Real Estate Association, some investors reported their concern of realty bubble in 2016.
As per its latest report of activities in 2016, the association said that the Department of Construction has verified the eligibility for 57 projects with 29,017 houses; 27,792 apartments and 1,225 other low-ceiling houses. Of which, there are 5,630 deluxe apartments; 16,750 average condos and 5,412 cheap apartments.
Moreover, there has been unbalance between demand and supply and increase in secondary investors. .
Additionally, Mr. Khoa ordered a careful selection of investors or people will suffer losses. Good investors must have good financial capability and performance.
Another matter needs to be take heed is traffic. Authority will put down the housing projects in residential block in alleys to prevent traffic congestion.
Last but not least, illegal construction is a headache especially in outlying districts Binh Chanh, Hoac Mon and Thu Duc. Mr. Khoa ordered construction department managers and administrators of the three districts have detailed plan to curb the matter.
The Department of Construction planned to carry out the city’s urban renewal and development, for the period 2016-2020, focusing on major projects and projects carried out in the middle, building new apartments in the land of old condos and providing accommodation for 2,000 households living along canals.
Furthermore, the city will repair 10 old condos in the area of 116,778 meter square and give compensation for resettlement of five old condos. In addition, the city will start building six condos with 1,785 apartments to replace old ones. 27 projects of social houses with 20,650 apartments will be finished in the year.
FDI capital hits record high despite long holidays in January
Vietnam’s foreign direct investment (FDI) attraction hit $1.42 billion in January, the record high compared to the same period in previous years, despite two long Tet holidays the Western New Year and Lunar New Year, the Ministry of Planning and Investment has reported.
A total of 175 new projects were licensed with the capital of $1.24 billion, up 37.8 percent in project number and 23 percent in capital. In addition, 76 projects increased investment capital by $179.2 million, taking the total FDI capital to $1.42 billion, up 6.6 percent over a year back.
Disbursement was up 6.3 percent to reach $850 million. Of the total FDI capital, manufacturing and processing accounts for up to 67.1 percent.
On February 6th, the southern province of Ba Ria-Vung Tau granted investment certificates to four foreign and four domestic projects at a meeting with 150 businesses and some consulates’ representatives. The four foreign invested projects have the total capital of $311 million while four domestic ones have VND3.6 trillion ($159 million).
Two largest projects include a $185 million project of Heineken Vietnam Company to expand its beer plant’s capacity to 610 million liters a year. The other is a $108 million ultra white clear glass plant of Viglacera Corporation and Khai Thinh Group.
So far, the province has attracted 301 FDI projects with the total funds of $26.7 billion and 451 domestic projects worth VND245.5 billion ($10.83 billion).
The HCMC Customs Department reported that the city’s export import turnover neared US$6 billion in the first month of 2017 including $3 billion export values and $2.7 billion import.
The export import turnover at customs departments nationwide approximated $400 million since the first day of the lunar year until February 9th. The most exported items were computers, phones and components; machines, equipment and accessories; and steel products.
Japan to seek investment opportunities in HCM City, Dong Nai
More than 20 Japanese businesses want to seek opportunities for trade, finance, investment and hi-tech cooperation with their Vietnamese partners during their upcoming Feb 20-23 fact-finding tours of Ho Chi Minh City and Dong Nai province.
The information was released at a seminar in Osaka on February 7 by Vietnamese Consulate General in Osaka, Saikai City and Ikeda Senshu Bank.
At the seminar, the Vietnamese Consulate General updated 40 business representatives from small and medium sized enterprises (SMEs) on domestic economic affairs, incentives for foreign investors and potential for cooperation in the support industry between Vietnam and Japan.
Hazama Emiko, Sakai Deputy Mayor said the city gives priority to businesses strong in manufacturing, mechanical engineering, and industrial production want to expand investment in Vietnam.
With more than 840,000 people, Sakai is the second largest city in Osaka prefecture and has collaborated with Vietnamese partners in many economic, trade and investment cooperation programs over the past years.
Vietnamese businesses owe US$440 mln to social insurance fund
Foreign companies owed more than 12 percent of the debt that should be used to pay workers' pensions.
Vietnamese businesses owed more than VND9.92 trillion (nearly US$440 million) of workers’ social insurance contributions at the end of 2015, and nearly half of those firms were based in Hanoi and Ho Chi Minh City.
The social insurance debts were up 5.5% from 2014, according to a new report by the State Audit.
Companies in the capital city owed VND2.17 trillion (US$95.6 million) and those in the southern metropolis were nearly VND2 trillion in the hole.
Foreign companies owed more than 12% of the debt while state-owned firms had racked up nearly 10% of the figure.
Contributions to the social insurance fund pay for workers' pensions and other forms of compensation when they are sick or take paternity or maternity leave.
To be able to receive the maximum pension allowance, which is equal to 75% of the basic salary, workers are required to pay into the fund for at least 35 years for men and 30 years for women.
Vietnam’s social security fund has been in crisis for years with many businesses evading payments. The International Labor Organization forecast that the fund will be in a deficit in 2021 and may be depleted by 2034 unless changes are made.
TMV breaks January sales record
Toyota Motor Vietnam (TMV) has announced total sales in January (excluding the Lexus) of 5,318 units, an increase of 6 per cent, or 317 units, compared to January last year and its highest ever for the first month of the year.
Customers in the north purchased 2,276 units (43 per cent), those in the central region 648 units (12 per cent), and those in the south 2,394 units (45 per cent). The record figure is the result of major efforts by TMV and its dealers to meet customer demand for motor cars just prior to the Tet holiday.
Sales of passenger cars stood at 2,614 units and sales of commercial vehicles 2,704 units.
The Vios maintained its leading position during the month, with 1,704 units sold, up 17 per cent compared to January last year. The Corolla Altis saw sales of 430 units, virtually the same as in January 2016.
Sales of the Camry stood at 373 units. Nineteen years after first being launched in Vietnam in January 1998, sales have now exceeded 47,000 units.
In the commercial vehicles segment, the Innova achieved impressive sales of 1,136 units, an increase of 16 per cent compared to January 2016. In the eleven years since being introduced in Vietnam in January 2006, the Innova has always been on the best-selling list and is ideal for work and family travel.
Among the completely-built-up (CBU) vehicles imported and distributed by TMV, the leader in sales during January was the Fortuner, with 1,237 units, up 30 per cent compared to January last year. The impressive increase was thanks to the all-new Fortuner 2017 - “Tough & Sophisticated” - with a new tough design, sophisticated strength and luxury feeling, which was launched during the month. With all-new improvements, the Fortuner will continue to maintain its leading position in the SUV segment.
Sales of the Hilux, meanwhile, reached 152 units, the Yaris 107, the Prado 84, the Land Cruiser 78, and the Hiace 17.
Despite changes to tax policies for luxury motor cars with large engines taking effect from July 2016, Lexus saw sales of 135 units in January.
Lexus Vietnam is now distributing the LS460L, GS350, ES350, ES250, LX570, GX460, and RX350, and new models with a turbo engine, including the GS Turbo, NX Turbo, RX Turbo, and RC Turbo.
Hyosung to build $1.2bn plant in Ba Ria Vung Tau
South Korea’s Hyosung Corporation has recently signed a memorandum of understanding (MoU) with the Ba Ria Vung Tau Provincial People’s Committee over the construction of a polypropylene (PP) and liquefied petroleum gas (LPG) plant project in the southern province.
Hyosung will build the plant on an area of 608,910 sq m at the Cai Mep Industrial Zone with investment of $1.2 billion, divided into two phases.
The first phase involves building an underground warehouse containing LPG, with investment of $133 million, and the first PP plant in the project, with investment of $336 million and a capacity of 300 million tons per year.
The second phase will build a PDH optical fiber plant with investment of $496 million and a second PP plant with investment of $226 million and a capacity of 300,000 tons per year.
The Hyosung Corporation is one of the largest conglomerates in South Korea and specializes in manufacturing fiber for automobile tires, spandex fiber, nylon, steel fiber, and other fiber.
In Vietnam it has a factory at the Nhon Trach 5 Industrial Zone in southern Dong Nai province, processing fiber (such as spandex, nylon, polyester, and carpet fiber), producing steel fiber for automobile tires (such as tire cord, bead wire, and saw wire), and manufacturing electrical motors.
Hyosung, in its proposal, pledged to ensure environmental protection by using modern and innovative technologies.
According to the latest report from the Foreign Investment Agency under the Ministry of Planning and Investment, South Korea retained its position as Vietnam’s leading source of FDI in 2016, with a total of $5.7 billion in 5,747 projects, primarily in the processing and manufacturing sector and the real estate sector.
The MoU signing ceremony was held at a meeting between local authorities and enterprises making their first investments in Ba Ria Vung Tau province this year. Local leaders also licensed eight domestic and foreign projects with investment of $311 million and $156 million, respectively.
The province has so far attracted 301 foreign-invested projects worth nearly $26.7 billion and 451 domestic projects valued at over $10.67 billion.
Mr. Nguyen Hong Linh, Secretary of the Provincial Party Committee, said the province would take measures to reform administrative procedures and create a vibrant and responsible business climate.
The provincial economy grew 5.6 per cent last year and it contributed in excess of $1.41 billon to the State budget and more than $434,000 to social welfare programs, and also generated over 22,000 jobs.
Work to start on two expressways this year
Construction on two expressways passing through the southern province of Dong Nai will start sometime this year. The two roads are Dau Giay-Lien Khuong and Dau Giay-Phan Thiet.
According to a plan of the Ministry of Transport, the first section of Dau Giay-Phan Thiet expressway will commence construction in the first quarter of this year. The expressway is divided into two sections with the first stretching 36 kilometers from Dau Giay to Xuan Loc District in Dong Nai Province and funded by World Bank (WB) loans.
The 62-kilometer-long second section from Xuan Loc District to Phan Thiet City in Binh Thuan Province will be developed under the public-private partnership (PPP) format, with construction work expected to begin late this year.
The expressway requires a total investment of more than VND17 trillion (US$751 million), with VND6.2 trillion of it for the first section.
As for Dau Giay-Lien Khuong expressway, the 60-kilometer-long first section connecting Dau Giay and Tan Phu will be built under the build-operate-transfer (BOT) format this year.
The section worth VND4.6 trillion will have four lanes and allow vehicles to travel at 80 kilometers per hour.
According to a proposal of Project Management Unit 1 (PMU1) under the ministry, work on the section will commence in the fourth quarter this year and be complete in 2020.
According to the ministry’s guidelines, BOT can apply to new roads only and road users should be allowed to choose toll or toll-free roads.
Dau Giay-Lien Khuong expressway will be constructed in parallel with the existing National Highway 20. When in place, people can choose to use either the highway or the new expressway.
HoREA proposes swapping old condo units with new ones
The HCMC Real Estate Association (HoREA) has written to the Department of Construction proposing compensation, support, resettlement and temporary accommodation for those affected by condo renovation projects.
When newly-built condos are put into use, legal condo owners at old buildings should be resettled in the new apartment buildings with the same or larger area at no extra cost, according to HoREA.
For run-down condo apartments which are not owned by the State, residents who have home ownership certificates should be relocated to new apartments and granted certificates of land use rights and home ownership without paying a registration fee.
In case those having to make additional payments for any area differential will have priority access to loans from Vietnamede credit and financial institutions, or the city’s housing development fund. They will be awarded home ownership and land use certificates upon full payment.
The city has 474 residential buildings built before 1975 and they house 27,000 households. Many apartments covering 10-30 square meters each are heavily deteriorating, posing serious threats to residents.
Social insurance funds mostly lent to State
A major part of Vietnam’s social insurance funds has been lent to the State and used to buy Government bonds while the remainder has been deposited at banks and lent to Lai Chau hydropower plant project, said a recent State Audit of Vietnam report.
In 2015, Vietnam Social Insurance lent the State a total of VND324 trillion (US$14.36 billion) out of its total VND435 trillion (US$19.2 billion). Meanwhile, banks took out loans worth VND59 trillion, or 13.7%, from the fund.
The agency spent VND45.5 trillion purchasing Government bonds, and lent VND6 trillion to Lai Chau hydropower plant project.
According to the report, Vietnam Social Insurance applied different lending rates, ranging from 5.08% to 5.1% per year for short-term loans (less than 12 months) and around 9.04% for loans to the State, G-bonds and the hydropower plant project. The rates averaged out at 8.49%.
Notably, the agency has not recovered principal and interest from the loans given to finance leasing arms of the Vietnam Bank for Agriculture and Rural Development (Agribank) as of the end of 2015.
Agribank’s Finance Leasing Company I (ALC I) paid Vietnam Social Insurance only VND1 billion in interest versus the total of over VND27 billion. ALC I failed to secure incomes for interest payment as it was being restructured, said State auditors.
Besides, Agribank’s Finance Leasing Company II (ALC II) still owed Vietnam Social Insurance over VND769 billion in 12 overdue loans since 2011, with interest reaching more than VND735 billion by the end of 2015. The enterprise became insolvent and was waiting for a decision from the Prime Minister.
Total unpaid social insurance premiums were reported at over VND9.9 trillion, up 5.5% against 2014, with compulsory insurance premiums making up a big ratio.
Of the figure, debts overdue for 12 months or longer totaled over VND4 trillion, including VND1.4 trillion in irrecoverable debts owed by dissolved and bankrupted enterprises.
Jetstar Airways launches Vietnam - Australia direct flights
Low-cost carrier Jetstar Airways in Australia, a member of Jetstar Group, has just announced the launch of two direct flights between Vietnam and Australia, according to Jetstar Pacific in Vietnam.
Accordingly, Jetstar Airways will use Boeing 787 Dreamliner to operate three flights per week, starting from May 10 between Ho Chi Minh City and Melbourne, and four flights per week from May 11 between Ho Chi Minh City and Sydney.
Director General of Jetstar Airways Jayne Hrdlicka highlighted Vietnam’s tourism potential, saying that the country is one of the fastest growing travel destinations in the Southeast Asian region thanks to its cultural diversity, beautiful beaches and food.
The launch of the air route is expected to promote tourism exchange between the two nations, she added.
On the launching occasion, the carrier offers a promotional campaign, under which travellers can buy one way tickets for the routes at 3,430,000 VND (150.92 USD) and get free return tickets.
Promotional tickets are available at the website www.jetstar.com from 18:00 February 12 to the end of February 16.
Jetstar Group is one of the largest low-budget airlines in Asia-Pacific, operating over 4,000 flights per week to 80 destinations in 17 countries and territories in the region.
Quang Nam emerges as attractive destination for investors
The central province of Quang Nam is expected to become an investment magnet in the central region using its advantageous location as well as favourable investment environment.
With an area of 10,438 square kilometers, Quang Nam has a strategic location in the central key economic region, neighbouring Da Nang city, Quang Ngai province and an ASEAN member of Laos.
It lies on the East-West Economic Corridor, which is favourable for road connection with Laos, Cambodia, Thailand, Myanmar, as well as sea links with other ASEAN countries.
Besides a synchronous land, railway and sea transportation system, it boasts eight industrial parks and 50 industrial clusters having standardized waste treatment systems.
At the same time, social and service infrastructure such as schools, hospitals, hotels, restaurants and entertainment facilities in Quang Nam has also met the demand of investors and locals.
According to the provincial Department of Culture, Sports and Tourism, Quang Nam has more than 5,436 hotel rooms to international standards, which makes it an attractive destination for tourists.
So far, the locality has attracted 126 FDI projects worth 5.5 billion USD from investors from all around the world, including the Republic of Korea, Japan, Singapore, the US, China, France, Germany and Italy.
In the long term, Quang Nam will focus on luring investment to sectors of its strengths such as support industry, processing industry, agriculture, tourism, services, urban development, human resource training, infrastructure construction and business at industrial parks and clusters.
Investors to Quang Nam can choose and decide their investment methods, along with enjoying preferential policies offered by the Government in land use, corporate income tax and import tax.
According to the provincial Centre for Public Administration and Investment Promotion, a 10 percent reduction in corporation income tax in 15 years has been applied for newly-established firms in extremely disadvantaged localities and the Chu Lai Economic Zone as well as those in high technology agriculture, science and technology, vocational training and environment.
They are also given tax exemption in four years and a 50-percent reduction in corporate income tax in the following nine years.
At the same time, Quang Nam has also supported investors in land use, along with specific preferential policies to large-scale projects.
Dinh Van Thu, Chairman of the provincial People’s Committee, was quoted by Dau Tu (Investment Review) as saying that amidst the current extensive international integration trend, Quang Nam is working hard to become a promising land with abundant investment opportunities.
The province has applied comprehensive measures to improve its investment environment and support enterprises, focusing on administrative reform, he said, noting that the launching of its Centre for Public Administration and Investment Promotion has showed the province’s determination in the field.
Currently, Quang Nam is hosting many big domestic and foreign firms in various fields, including Truong Hai Auto, Suntory-Pepsico, Viet Nam Brewery Limited, Inax, Groz-Beckert and entertainment-service brands such as The Nam Hai, Montgomerie Links, Victoria, GoldenSand, and Palm Garden.
Tra fish sector should target Asian market: experts
Experts have advised tra fish businesses to focus on the Asian market, particularly China and countries from the Association of Southeast Asian Nations (ASEAN) in 2017 in anticipation of difficulties from the current main markets of the US and EU.
According to the Vietnam Association of Seafood Exporters and Producers (VASEP), this year, tra fish exports to the US and EU will continue facing challenges, including fierce competition from other countries.
At present, the US is the biggest consumer of Vietnamese tra fish, followed by China.
However, Vietnamese businesses will soon struggle to sell tra fish to the US due to anti-dumping taxes imposed by the US Department of Commerce.
Besides, under the US inspection programme of catfish, from September 2017, countries, which could not submit a list of export companies to the US and documents proving food safety and hygiene according to the US Department of Agriculture’s Food Safety and Inspection Service’s regulations, will not be allowed to export to the market.
Given these difficulties, experts suggested businesses pay more attention to the Asian market.
The VASEP said tra fish exports to China in 2017 will still account for about 20 percent of the sector’s exports.
Businesses should focus on the high-quality segment instead of output, change their business methods and create clean products with reasonable prices.
Chairman of the Board and General Director of the Hung Vuong Corporation Duong Ngoc Minh said China’s Hong Kong is expected to be one of the leading importers of Vietnamese tra fish in 2017 with growth of 30 percent. However, Vietnamese enterprises still need to control the quality of products and carefully review contracts with Chinese partners, he said.
He also advised businesses to make use of the domestic market through selling products at supermarkets or online.
Nearly 400,000 tonnes of aquatic products worth 15 trillion VND are sold in Vietnam each year, he said.
Secretary General of the VASEP Truong Dinh Hoe said the most worrying issue at present is fish material, noting that in the fourth quarter of 2016, tra fish processing plants saw their output fall 30 percent against previous months, while demand increased by 40 percent.
According to the Ministry of Agriculture and Rural Development, Vietnam has over 100 tra fish manufacturing and export facilities.
In 2016, the tra fish sector earned 1.67 billion USD from exports, a year-on-year increase of 6.6 percent. The fish was sold in 137 markets worldwide, with the US making up the largest proportion of 23 percent, followed by China (17 percent) and the EU (16 percent).
The sector aims to fetch more than 1.7 billion USD from exports in 2017.
Vietnam tuna catches face penalties in Japan
The Japan Fisheries Agency plans to control catches of Pacific Bluefin tuna, a fish species under threat of extinction, by applying the total allowable catch (TAC) system with a legal clause that would impose penalties on violators, sources close to the issue said.
Under the TAC system, the agency will decide in advance on volumes of Pacific Bluefin tuna that fishermen will be allowed to catch to control the marine resource.
The total allowable catch system sets limits on annual catch volumes in advance to control marine resources. Japan introduced the system in 1997. Currently, seven species — saury, Alaska pollack, horse mackerel, sardines, chub and spotted mackerel, Japanese common squid and snow crab — are subject to the system.
The selection of species for the list has been decided based on such factors as importance to the daily life of the Japanese public and whether catch volumes are large or inconsequential.
Member countries of the Western and Central Pacific Fisheries Commission (WCPFC), for which Vietnam is a cooperating non-member, had reached an agreement to halve catch volumes of immature Pacific Bluefin tuna from 2015 onward.
WCPFC is an international organization that manages Pacific Bluefin tuna as a resource.
However, dishonest practices such as falsely reporting catch volumes have been rampant in the industry worldwide. Thus, the Japanese agency decided to introduce stricter controls on both domestic catches and imports.
The agency also hopes to demonstrate to the international community that Japan is taking a rigorous approach to managing marine resources by adding Bluefin tuna to the TAC system list.
Uzbek Deputy PM visits Vietnam rice industry
Uzbek Deputy Prime Minister Mirzaev Zoyir on February 11 headed up a contingent of delegates for a visit with rice industry representatives and a seed Company in northern Thai Binh Province.
With a ripening potential for increased agriculture trade, Uzbek ag businesses are increasingly becoming interested in boosting rice trade with Vietnam.
One of the tour stops was at the Thai Binh Seed Company where they found an immaculate operation and an astute operator. They’re looking for clean, high-quality food; food that’s been monitored from seed to the shelf and everywhere in between, said company reps.
Uzbek imports a lot of rice and they are looking for a higher grade of it. If Uzbek would import more rice from Vietnam, that would be good for the entire rice industry.
The reps said the contingent will probably go back to Uzbek, digest it, write it up and meet with Vietnam again. Hopefully, it won’t be long before the protocols are in place. Once we do that trade more rice trade can begin.
Vietnam going big on shrimp farming
The Vietnam government has announced plans to invest heavily in perfecting the country’s intensive shrimp farming operations and expand production significantly over the next few years.
Earlier this month, the Government announced plans to expand farm raised shrimp exports more than three-fold from the current harvest estimated at US$3 billion in 2016 to US$10 billion over the next few years.
To accomplish the goal, the country will dig new ponds and expand the hectarage devoted to shrimp production that it already operates by reducing its rice harvest, principally in the Mekong Delta, said Minister of Agriculture and Rural Development Nguyen Xuan Cuong.
The Government made the decision to place all future bets on shrimp farming following a rice harvest in 2016 that was devastated by the rising salinity of the Mekong River in 2016.
In the lower reaches of the Mekong Delta, saltwater has penetrated inland as far as 60 kilometres, according to meteorologists, killing crops and shuttering family farms, eliminating thousands of rural jobs.
Longer-term, the Government is convinced that the shrimp farming business can compete on more equitable terms with the country’s other more profitable agriculture production.
The increasing salinity may be bad for rice farmers but it is great for those in the shrimp business.
Minister Cuong noted the gross revenue of the country’s shrimp farmers from exports last year surpassed that of rice, making it the second-largest agricultural export for 2016, after coffee.
Government officials in the Mekong Delta and other coastal areas have been working to assist rice farmers make the transition to cultivating shrimp that will affect tens of millions in the Mekong Delta alone.
Minister Cuong noted the global market for shrimp has been steadily increasing over the past few years and that the market demand is such that country would be able to safely expand shrimp farming to encompass some one million hectares from the 700,000 hectares now under cultivation.
In addition, he said Government officials will work on introducing better-quality strains of shrimp and improving farming techniques. His target is to expand shrimp production to an average of eight metric tons per hectare.
Intensive shrimp farms can hold a density of up to 220 shrimp per square metre, compared with only 180 for semi-intensive farms, resulting in an annual yield of 10 tons, versus 5 tons per hectare using the semi-intensive method.
If one were to run the math, annual gross revenues of US$10 billion from shrimp exports is very doable, said Minister Cuong.
The weather in the Mekong Delta is most suitable for shrimp and is the motivating factor in making the decision to transition away from rice. The current weather oscillations are just too much for rice.
Japan now open to Vietnam banana growers
After six months of negotiations, bananas from Vietnam can now be exported to Japan, making it one of the first fresh fruit to gain access to that market, a leading fruit exporter has reported.
Vo Quang Thuan of the Huy Long An Ltd, one of the country’s largest fruit exporters, said that in addition to Japan, bananas have recently gained market entry into the Republic of Korea and Dubai.
The market openings are great news for Vietnamese banana producers and agricultural exports, said Thuan. Hitherto, China was the only foreign market for bananas, but now prospects for future exports are much improved.
The Japan market is a promising market for bananas, said Le Si Cong, director of La Ba Da Lat Company, another large fruit exporter. During the first month of the year demand was much higher than we anticipated, he noted.
Over the past few years, Vietnam and Japan industries have worked together to develop the scientific research needed to support the phytosanitary negotiations between the two countries.
These efforts, along with strong industry market development, have nurtured and paved the way for exports to this market. In the early going, bananas have sold in Japan at a competitive price, added Cong.