BUSINESS IN BRIEF 23/4
Solar power plant nears go-ahead in Thanh Hoa
Hoàng Sơn Trading Investment Joint Stock Company will partner with Univergy Solar, a Spanish-Japanese joint venture, to develop a VNĐ2.6 trillion (US$118 million) solar power plant in the central province of Thanh Hóa.
Leaders of the local company and a representative of Univergy held a working meeting with the provincial government on Tuesday to discuss the project.
The solar power plant is designed with capacity of 90MW, covering an area of some 1.5 million sq.m in Ngọc Lặc District’s Kiên Thọ Commune. It will include a three-storey office building, warehouses, canteens for workers, sports facilities and other technical and supporting facilities.
At the meeting, CEO of Univergy Solar JSC Fernando Davila said the company is a developer of renewable energy -- solar power, wind power, small power stations and geothermal power -- in Japan.
In 2017, the company has placed emphasis on the development of solar projects in Việt Nam, he said, adding that Univergy Solar is providing technology and equipment for Hoàng Sơn to develop the solar plant project in Thanh Hóa.
Nguyễn Đình Xứng, chairman of Thanh Hóa People’s Committee, pledged to support and create favourable conditions for Univergy Solar in particular and other investors in general. He also asked relevant agencies to help the investor complete procedures as required by law.
Measures sought to promote Vietnam – Lao border trade
The Ministry of Industry and Trade continues implementing a master plan to develop the Vietnam – Laos border market network by 2020, while developing a master plan for border trade between the two countries to 2025, with a vision through 2035 as part of efforts to boost bilateral trade.
Besides, Vietnam and Laos will make proposals to each other’s Government on establishing and upgrading border gates and economic cooperation zones along the shared border.
By the end of this year, the two sides will implement the new trade agreement and the border trade agreement while making a plan for the Vietnam – Laos trade development from 2017 – 2026.
Measures will be sought to raise two-way trade value by 10 percent from 2016.
Delegation exchanges and business connections will be strengthened between the two nations to promote trade in border provinces.
Publicity campaigns will also be conducted to lure domestic and international resources for projects on border trade development, contributing to poverty reduction, and improving border residents’ living conditions.
According to experts, incentives should be devised to encourage different economic sectors to participate in border trade.
Vietnam and Laos share eight international border gates, seven key border gates, and 18 small border gates. Nine border-gate economic zones have been established, facilitating trade and service development between the two nations’ border localities.
According to the Ministry’s Asia – Pacific Market Development Department, Vietnam – Laos border trade has seen remarkable expansion.
Investment in infrastructure facilities has been increased in the border gates, while efforts have been made by localities to fight smuggling, trade fraud and other crimes.
According to the Ministry’s Import-Export Department, in 2016, two-way trade value between Vietnam and Laos reached 801 million USD. Vietnam imported 342 million USD worth of goods from Laos and shipped 459 million USD worth of goods to the neighbouring country.
Vietnam’s major exports are aquatic products, footwear, garment-textile and materials, steel and steel products, coal, oil and gas, fertilizer, equipment, electric wire cable and machines.
Meanwhile, Laos’ major exports to Vietnam are timber and wood products, metals, ore, and tobacco sub-products.
According to the Vietnam Trade Office in Laos, Vietnam ranked third among investors in Laos, with investment hitting 5.1 billion USD so far.
Schneider Electric inaugurates $45 million factory in HCM City
Schneider Electric, the global specialist in energy management and automation, inaugurated its US$45 million manufacturing plant in HCM City’s Sài Gòn Hi-tech Park on Tuesday.
The plant is one of the largest factories in Schneider Electric’s global network and has more than 200 production units.
Equipped with advanced technology, the plant will produce high-tech electronic products for smart homes, in addition to traditional wiring products that are being manufactured in Việt Nam since almost 20 years.
The plant uses LEAN manufacturing concepts and the group’s latest energy and process management solutions, which will allow it to flex and scale according to its customers’ buying behaviour.
“The world is moving beyond stand-alone devices into an era where everything is connected. In the recent years, with the rapidly-growing IoT, smart home devices are becoming more prevalent. With this new plant, we are seeing a great opportunity to proudly manufacture "Made in Vietnam" products and deliver solutions to customers in global markets. We aim to bring more smart home devices produced from this plant to million households not only in Vietnam, but also other countries, and help them experience the most advanced technology based on IoT and automation”, said Mr. Jim Tobojka, Senior Vice President, Schneider Electric Global Supply Chain, East Asia, Japan, and Pacific.
One of the plant’s highlights is its commitment to sustainable development in Việt Nam.
In order to meet future needs, Schneider Electric has been training human resources for the new plant, and has simultaneously employed skilful workers and engineers.
The local staff will be able to improve their technical skills through national, regional and global training programmes, as well as through opportunities to work in different countries and regions where the group has presence.
The investment into a manufacturing factory reinforces Schneider Electric’s long-term commitment to help Việt Nam grow in terms of technological advances and human resource development for efficient energy management.
Globally, the group offers integrated solutions across multiple market segments and has leadership position in non-residential and residential buildings, industries and machines manufacturers, utilities and infrastructure, data centres and networks.
In 1992, Schneider Electric Việt Nam participated in the national “500KV North-South Transmission Line” project. Since 1994, it has established three offices in Hà Nội, HCM City and Đà Nẵng.
CBU auto imports soar in first quarter
Vietnam’s completely-built-up (CBU) auto import volume increased sharply in the first three months of this year, helped by lower import duties.
In March, the country imported more than 11,000 autos valued at US$180 million, up 39.3% and 13.9% against last month respectively, said a report of the General Department of Customs. In the first quarter, auto imports amounted to nearly 26,500 units worth U$488 million, up 34.4% in volume and only 1% in value over the same period last year.
The number of under-nine-seat autos imported was 16,310, increasing 136% and accounting for nearly 62% of the nation’s total. Meanwhile, the country imported more than 8,800 trucks, down 10.2%; 170 over-nine-seat autos, down 10.2%; and 1,200 others, down 56.1% compared to the same period last year.
Imports of under-nine-seat vehicles alone amounted to US$236 million. With taxes excluded, the average auto price in Q1 was US$14,500 per unit while the level in the same period last year was US$24,600 per unit, meaning that most of the imported CBU autos of under nine seats were low priced.
Notably, imports of CBU autos originating in ASEAN countries in the first three months totaled 14,460 units, a year-on-year increase of 67.6%. Auto imports from Thailand reached 10,050 units, up 28.8% over the same period last year, while auto imports from Indonesia totaled 4,400 units, up 81.1%.
Auto imports from Indonesia and Thailand are predicted to continue growing in the near future as the ASEAN Trade in Goods Agreement (ATIGA) will send import duty on CBU autos from ASEAN countries falling to 0% in 2018 from 30% this year.
Vietnam imported nearly 4,800 CBU autos from India in January-March, a four-fold increase over the same period last year. The average price of Indian-made autos was the lowest, at US$3,800 per unit (about VND84 million).
Vietnam’s major auto exporters also include South Korea with nearly 2,970 units and Japan with more than 1,050 units.
Auto importers and distributors are slashing retail prices of domestic vehicles but these downward adjustments are not attractive enough.
Consumption of under-nine-seat autos is forecast to decrease this year because the duty on CBU auto imports from ASEAN countries will drop to 0% next year, leading to many consumers delaying their car purchase plans.
According to auto manufacturers, the auto market this year could contract 7-10% compared to 2016. For example, Truong Hai Auto Joint Stock Company (Thaco), the largest auto firm in the country by sales volume, looks to sell 58,384 units this year, down 8% from 2016 and accounting for 21% of Vietnam’s auto market.
The domestic auto manufacturer, assembler and dealer also plans to reduce auto prices by about 5% this year.
Hotel room shortage concern rises as MICE arrivals surge
MICE tourist arrivals to HCMC have recently soared, causing concerns among travel firms over possible shortages of hotel rooms and conference hall space.
Major hotels in the city said average room occupancy in the first quarter of 2017 was high. For instance, many hotels of 4-5 stars reported occupancy of over 80% or even 90% in February.
Many famous hotels are full, making it difficult for travel companies to arrange accommodations for guests of Meeting, Incentive, Conference and Event (MICE) programs. “There is a balance between demand and supply at the moment but if the MICE market grows further, the possibility of lacking hotel rooms for MICE tourists will be high,” said a source from Saigontourist Travel Service Company.
Since last year, MICE visitors to HCMC have increased steadily. Many companies have seen an increase of up to 20% in MICE guests. However, the city’s hotels and convention centers seem to be overstretched, tourism companies have had to move some groups to other cities and provinces.
“We have transferred some MICE groups to Danang and Nha Trang cities. HCMC holds great potential for MICE tourism growth but the city needs to invest more in infrastructure, hotels and convention centers,” said Nguyen Ngoc Chau, chairman of Ben Thanh Tourist.
According to the HCMC Department of Tourism, by February this year, the city had had 1,926 star-rated hotels with 48,182 guest rooms, including 116 hotels of 3-5 stars with 14,641 rooms. The average room occupancy rate of 3-5 star hotels was about 70%.
The department has asked the city government to offer incentives for projects to construct, expand and upgrade 3-5 star hotels.
Tourism enterprises have suggested the city build more exhibition and convention facilities. Currently, the city has only two exhibition and convention centers, namely GEM Center in District 1 and Saigon Exhibition and Convention Center (SECC) in District 7.
However, GEM is not big enough to accommodate large events while SECC is always full, with 56 large exhibitions already booked for this year.
Tech innovation must drive SMEs: experts
Domestic small and medium-sized enterprises (SMEs) should regard tech-driven innovations and digitisation as a guiding development trend when integrating into the global production and value chain.
Nguyen Hoa Cuong, deputy director of the Enterprise Development Department under the Ministry of Planning and Investment, made this remark at a seminar themed “Digitising the Vietnamese Economy: Empowering SMEs for the Global Market” held yesterday in Ha Noi.
The event, organised by the US-ASEAN Business Council (US-ABC) and the Viet Nam Chamber of Commerce and Industry (VCCI), attracted 180 SMEs operating in many business sectors. They heard experts from multinational companies discussing new policies, experiences, tools and solutions to enhance SMEs’ capacity in exploiting the potential of the growing digital economy, so that they can participate more effectively in the global supply chain.
Sunil Singh, Chief Information Officer of the Coca-Cola Company Bottling Investments Group, said businesses could not develop without innovation, adding that Coca-Cola was devoting one-third of its capital to tech-driven innovation, with a focus on automation, digitisation and artificial intelligence.
“If firms don’t apply automation, digitisation to their business models, they will have a hard time competing with their rivals and will soon be eliminated from the market," said Singh, adding that digital transformation was a strategic priority.
Regarding supply chain management, Frank Weiand, General Director of Supply Chain Services International, said the supply chain cost in Viet Nam accounted for 20 per cent of GDP and may grow to 25 per cent in the next coming years, much higher compared to Laos, Thailand and China. “If businesses reduce about 10 per cent of the supply chain cost, they can save 1.5 to 2 per cent of GDP,” Weiand said.
He added that production costs of Vietnamese enterprises were 20 per cent higher than those of neighbouring countries, such as Thailand and China, because Vietnamese enterprises were not yet well integrated in the international supply chain in terms of procurement, operations and sales. They were also behind in the application of international standards to improve quality and production capability, and were disadvantaged due to the delayed implementation of the ASEAN economic blueprint.
Improvement of quality management systems and manufacturing processes can increase efficiency by up to 40 per cent and reduce costs. Optimisation of procurement processes offers cost reduction potentials of over 20 per cent, Weiand said.
During the seminar, representatives from Microsoft, MasterCard and other companies also shared their experiences in fields such as cloud technology, digital payment and business regulation.
Vinatex breaks ground on industrial park in Nam Dinh
The Vietnam Textile and Garment Group announced on April 18 that it has begun construction of the first phase of a US$400 million clothing and textile industrial park in the province of Nam Dinh.
The Rang Dong Industrial Park, located 140 kilometres from Hanoi, spans an area of 2,109 hectares. It will be built in two phases, with the first phase scheduled for completion in 2018.
Once completed, the IP will have a capacity to produce two billion metres of fabric per year and employ 60,000 people.
Govt sets solar power price at 9.35 cents
State utility Vietnam Electricity Group (EVN) is required to buy all output from solar power projects connected to the national grid at VND2,086 per kWh (9.35 U.S. cents), excluding value-added tax, according to a new decision of the Prime Minister.
The price might be changed based on the exchange rate, says the Prime Minister’s Decision 11/2017/QD-TTg which encourages development of solar power projects and takes effect from June 1, 2017 to June 30, 2019. Due to the lack of a pricing mechanism, investors have been reluctant to get involved in solar power generation projects. Investors said the solar power price should be set at 10 U.S. cents per kWh or higher to guarantee profitability for them.
Diep Bao Canh, general director of Red Sun Solar Energy JSC, told the Daily that 9.35 cents a kWh would allow investors to earn some profit as the solar power generation cost had declined. “In the past, about US$1.2 million was needed to invest in each megawatt of solar power but the cost has now edged down to US$1 million. Therefore, there are many projects in the pipeline,” said Canh.
The decision also mentions other incentives relating to capital, land, import tax and corporate income tax. For instance, solar power projects are exempt from duties on goods imported to create fixed assets.
These projects, along with power lines and transformer stations for transmitting electricity to the national grid, shall also enjoy exemptions or reductions of land use fees, land rent and water surface rent.
At a seminar on attraction of investment into solar energy in
HCMC late last year, Huynh Kim Tuoc, director of the HCMC Energy Conservation Center, said 2017 would see a surge in solar power development as many domestic and foreign investors are getting involved in solar energy projects with each having capacity of 30 to 100 MW.
Regarding the solar power price, energy experts said that in Southeast Asia, Vietnam cannot compete with Thailand or the Philippines. Solar power in Thailand costs 16 U.S. cents per kWh, so it is very attractive to investors. Indonesia, Malaysia and Bangladesh also offer higher solar energy prices.
Vietnam holds huge potential for solar energy development but the sector has remained underdeveloped.
Da Nang selects seven high-tech agriculture areas
The Da Nang City People’s Committee has approved seven locations under planning for high-tech agricultural production in the city.
The sites are all located in Hoa Vang district, with two high-tech agricultural areas growing vegetables, flowers and herbs in Hoa Ninh commune (40 ha) and Hoa Phu commune (50 ha), two high-tech closed farming areas in Hoa Khuong commune (30 ha) and Loc My village, Hoa Bac commune (230 ha), two safe vegetable production areas in Hoa Khuong commune (20 ha) and Hoa Phong - Hoa Khuong commune (20 ha), and a brackish water, shrimp and crab aquaculture area in Hoa Lien commune (50 ha).
The People’s Committee has assigned the Department of Planning and Investment and the Investment Promotion Department to call for investment. The Department of Construction will also complete procedures relating to land use planning.
Agricultural development projects are mainly concentrated in Hoa Vang district, where there are already a number of projects in the production of clean and high-tech agricultural products, such as a project producing safe vegetables in Nam Thanh village, Hoa Thanh commune, belonging to the Hapras Joint Stock Company and on an area of 7.5 ha, a project planting yellow turmeric and dace on the area of 10 ha belonging to the Danapha Pharmaceutical Joint Stock Company in Dong Lang village, Hoa Phu commune, and a project planting green grapefruit belonging to the Bach Phuong Company in Hoa Ninh commune.
The People’s Committee will hold a conference in the future on “Attracting Investment in High-Tech Agriculture in Da Nang City in Connection with Central Key Economic Provinces”, to analyze and assess the potential, advantages, and challenges in developing high-tech agriculture in Da Nang and neighboring provinces.
The conference will also promote and attract domestic and foreign businesses and investors as well as international organizations to draw attention to investment in the production, processing, and marketing of agricultural products.
Vietnamese milk fruit accepted in US
The US Animal and Plant Health Inspection Service (APHIS) under the US Department of Agriculture (USDA) has announced that Vietnamese milk fruit can be imported into the country.
The US only allows the import of five types of Vietnamese fruit: dragon fruit, rambutan, canola, longan, and now milk fruit.
In addition to meeting general regulations such as the Law on Cost and Freight, Vietnamese milk fruit imported to the US also meets other regulations, such as the Code of Federal Regulations, being imported as commercial goods, and having quarantine certificates issued by the Plant Protection Department of Vietnam.
The US is also considering the importation of Vietnamese mangoes and will soon announce a decision.
The total value of Vietnamese fruit and vegetable exports was $2.4 billion in 2016, an increase of 30 per cent against 2015, and is expected to reach $3 billion this year. The value of such exports now exceeds the value of rice exports.
Vietnamese fruit and vegetables are exported to 60 countries and territories but trade promotion and steps to maintain product freshness have fallen short of expectations.
Early this year, Vietnamese dragon fruit were officially exported to Japan, the second fruit, after mangoes, to be exported to the country. Like mangoes, the red, fresh dragon fruit must be steam-treated before being exported, to counteract fruit flies.
Dragon fruit has the highest export value among Vietnam’s fruit and is expected to be one of nine key export fruits in the future. Export volumes to the US, however, remain small as a great deal comes from China via unofficial channels. Official exports account for 2-3 per cent of the total, according to the Ministry of Industry and Trade.
Handbook helps banks weigh projects
The State Bank of Viet Nam has coordinated with the International Finance Corporation (IFC) to prepare a handbook on social and environmental risk assessment for 10 economic sectors serving credit operations of commercial banks.
The manual can be considered a toolkit to help banks assess environmental and social risks of credit projects and assist credit officers appraise business plans, ensuring effective green and sustainable development.
The 10 specific sectors are agriculture, chemicals, construction and infrastructure, and energy, as well as food processing, textiles, petroleum and mining, along with non-metallic mineral products exploitation and waste treatment.
The handbook, expected to be issued in 2017, has three parts.
Part A will contain information on the businesses and projects that need credit grants. In this part, credit institutions need to ask their clients to provide information on issues such as compliance of the enterprise with respect to environmental, labour and social regulations and company’s ability to manage environmental and social risks.
Part B will focus on environmental and social impact of projects. This section lays out specific criteria to consider the potential and existing risks and impact of the projects on the environment (air, water, land and hazardous waste, as well as raw materials and energy consumption), on the workforce (working conditions and health safety), on health and the safety of people living around the project area, and on biodiversity and cultural heritage.
Part C will consist of recommendations that underpin the credit decision, the price and terms of disbursements in the credit agreements and the level of credit management and supervision of commercial banks.
According to IFC, green credit is the credit that banks give to projects that are less risky for the environment or to protect the environment.
In 2016, outstanding loans for green projects reached some VND84.781 trillion, up 19.7 per cent compared with the end of 2015, accounting for 1.5 per cent of total outstanding loans of the economy, with some 3.2 million credit contracts.
Credit granted to projects which have gone through environmental and social risk assessment reached some VND187.9 trillion, with more than 129,000 contracts.
According to the national action plan on green growth in the 2014-20 period, the Prime Minister assigned the SBV to review, revise and complete financial and credit regulations so as to be aligned with green growth objectives, organise training courses to strengthen the capacity of commercial banks and financial institutions in green credit activities and develop financial-banking services to support green growth.
The SBV, therefore, aims to guide credit institutions to develop business strategies in line with the State’s strategy on environmental protection and green growth. Accordingly, investment projects with the participation of bank credit must comply with regulations on environmental protection, social safety and energy saving.
This handbook will be a reference document. SBV encourages commercial banks to apply the guidelines.
Wood industry urged to develop more linkages
The various components of the woodworking industry’s supply chain need to establish close links to ensure the industry’s sustainable development, an expert has said.
Such linkages would bring many benefits, including efficient utilisation of resources, increase in specialisation, reduction in risks, more market opportunities and higher profits, To Xuan Phuc of the sustainable forestry NGO Forest Trends organisation, said.
He was speaking at a forum held in Ho Chi Minh City last week by the Vietnam Timber and Forest Product Association, the Handicrafts and Wood Industry Association of Ho Chi Minh City, Forest Trends, and the Forest Products Association of Binh Dịnh.
There are around 4,300 businesses in the Vietnamese woodworking industry employing thousands of workers, he said.
But vertical and horizontal linkages in the industry, including links between wood processors, timber suppliers and forest growers, and between firms in the same sector, remain weak mainly due to a lack of trust and fair sharing of benefits, he said.
It is one of the country’s key export industries, with export revenues going up every year and expected to continue rising in the coming time, he said.
“But there remain some systemic shortcomings that affect the sustainable development of the industry.”
Vietnamese companies tend to invest in the entire production chain, which often means the investment is spread too thin, technologies are mismatched, and there is no specialisation at any stage in the supply chain, he said.
Besides, there is no supporting industry for the woodworking industry, and as a result its productivity is much lower than in Thailand or Malaysia, he said.
A shortage of raw materials also threatens the sustainable development of the industry.
Dien Quang Hiep, chairman and director of MIFACO Co., Ltd, said: “A majority of firms in the industry are small or medium-sized, and if we do not link up we [cannot] compete with large foreign firms.
“These linkages would determine the very survival of the industry,” he said.
The businesses in the industry are scattered and so it is hard for them to link up and work together, he said.
The creation of a wood processing industry cluster would provide companies the opportunity to share information, resources and export orders, he said.
This needs support from the Government and localities, he said.
Vo Quang Ha, general director of Tan Vinh Cuu Joint Stock Company (Tavico), said to successfully forge linkages, enterprises must have the same direction and a common goal.
They need to discuss ways to develop linkages and avoid conflicts, he said.
The association must play a greater role as an intermediary to bring them together for mutual benefit, he said.
Companies should establish close links with households that grow forests to ensure a steady source of timber and reduce risks, delegates told the forum.
Nguyen Quang Vinh of the Vietnam Timber and Forest Product Association, said planted forests have become the main source of timber for Vietnam’s wood processing industry.
To develop a steady and legitimate source of timber, some linkages have been established between wood processing companies and households growing forests, he said.
For instance, companies making products for IKEA Group, one of the world’s largest wood products company -- such as Nam Định Forest Products JSC (NAFOCO), Woodsland JSC, and Scansia Pacific -- have tied up with households in Phu Tho, Tuyen Quang, Yen Bai, and Quang Triprovinces to grow forests certified by the Forest Stewardship Council, he said.
They use the certified sustainable wood to make products for IKEA, he said.
This model helps improve benefits for the households and ensure a steady supply of timber for the companies, he added.
Dragon Capital Group offsets entire annual emissions
Dragon Capital Group (DCG) announced that it has offset all of its annual carbon emissions by purchasing Voluntary Emission Reduction (VER) certificate from a Vietnamese rural biogas project.
The total 583.43 tonnes of CO2 emitted by the group this year was offset by green energy produced from the Biogas Programme for the Animal Husbandry Sector of Vietnam, launched in 2003 by the Livestock Production Department of the Ministry of Agriculture and Rural Development of Vietnam in corporation with SNV—an international development organisation established in the Netherlands.
The project provides farming families with access to renewable energy and improved hygiene through the development of a commercially viable biogas sector.
According to Gavin Smith, director of Dragon Capital Clean Development, “Offsetting Dragon Capital Group’s carbon emission through this project not only enhances our corporate social responsibility initiative but also encourages the development of small-scale biogas generation in Vietnam, providing rural farmers with a sustainable gas supply from farm waste.”
With the aim of becoming one of the leaders in promoting corporate sustainability and environmental responsibility in Vietnam, DCG is conscious of its consumption of natural resources and is committed to proactively manage its environmental performance. Part of this commitment, the company continuously keeps track of its carbon footprint and offsets unavoidable operational emissions to maintain its carbon-neutral status since 2008.
Hanoi real estate projects flout regulations
A local government inter-department inspection team has discovered many construction planning and land use violations at 50 real estate projects in Hanoi.
The team chose 50 random projects and found violations at all of them. Most of these projects have been completed and the buyers have moved in.
38 projects violated construction planning and standards such as the building's height and the number of floors exceeds the permitted or registered limit, incomplete construction planning forms and the apartments being used for the wrong purposes. 15 projects violated regulations on fire prevention and safety.
Many projects still have difficulties in paying land use fee or other financial duties. Some investors, where projects are built on state-owned land, illegally transferred the project to another party.
The apartment building project on 143, Alleyway 85 in Thanh Xuan District is owned by Vietnam Natural Resources and Environment Corporation and 135 Investment JSC and has been put into use.
However, the investors illegally increased the number of apartments by dozens and added another floor to the building. Moreover, its fire prevention plan hasn't been approved.
The Sakura Tower 47 project on Vu Trong Phung Street of Hung Tien Kim Son Company, the building project on 200 Quang Trung Street, Sai Dong urban area project are also accused of similar violations.
Hanoi 1 Equipment, Material and Urban Development Investment Company is the investor of a residential building on Nguyen Tuan Street. It illegally added an additional two more floors and failed to pay land use fees and its fire prevention plan hasn't been approved.
The inspection team suggested using strict punishments and measures to deal with stubborn violators who refused to follow the regulations and order to fix the violations.
The team proposed the Department of Construction and the Department of Planning and Architect to apply administrative fine to 38 project investors that had violated construction planning and standards.
If the investors fail to correct their violations within three months after the order from city authorities is issued, their bank accounts might be frozen and they won't be allocated land for other projects in Hanoi.
The rest will also face similar punishments. Their cases will be transferred to the fire department, the Department of Natural Resources and Environment and the Department of Finance.
Haiphong hub unleashes north’s growing potential
With the construction of the Lach Huyen International Gateway Port in the northern city of Haiphong and its related infrastructure, Haiphong is fast-tracking its industrial growth, catching up rapidly with the better-developed south.
Many industrial developers have decided to set up new factories in the nearby industrial zones, where prime industrial land is available adjacent to the new developments.
These locations benefit from highly improved maritime access and other trump-cards of the region such as the economic zone tax package, the abundance of competitively-priced labour, and reliable power. Among the nearly 500 projects committed to these industrial zones are those of major international firms like Bridgestone, LG, Knauf, and Flat Glass Group.
Several years ago, authorities realised that in order to attract more foreign direct investment (FDI), the infrastructure in the Red River had to be developed further.
The master plan consisted of a five-modal hub - comprised of road, rail, air, river, and deep-sea prongs - aimed at bringing the region to a new level. An airport system with close connection - between Noi Bai (Hanoi) and Cat Bi (Haiphong) - was established and has brought the region closer.
A new highway between Haiphong and Hanoi was put in operation in 2015, while highway connections between Haiphong, Halong, China, and Haiphong-coastal provinces are under construction. Last but not least, a new deep-sea port is currently nearing completion and will become operational no later than the second quarter of 2018.
The main difference compared to the developments in the southern region is the availability of prime industrial land in the middle of the spiderweb of new infrastructure developments, truly unlocking the potential of the north.
Called the “Gateway to North Vietnam”, the new deep-sea port will have, upon full completion in 2030, more than 14 kilometres of quays and handle more than 95 million tonnes of cargo.
The country’s economic growth is expected to increase the demand for container shipping in the northern area of Vietnam from 42 million tonnes in 2015 to 59 million tonnes in 2020.
With the new port, Post-Panamax vessels can make calls to northern Vietnam. This will help avoid the need for transhipment via other ports in the region and allow for direct shipment to the Americas and Europe, shortening lead times and increasing competitiveness.
The existing port of Haiphong has a draught between six and seven metres, and ships are limited to 20,000 deadweight tonnes (DWT). The new port will have a draught of 14 metres, allowing vessels up to 100,000DWT to berth, which will be a major game-changer for the entire region. This sea-change is expected to boost development and investment in the surrounding industrial zones and bring opportunities to the service industries and the supply chain. The first two container terminals are expected to become operational by the first quarter of 2018, and will be followed by one or more general cargo and bulk terminals.
Since construction started on the port and the highway, as well as other important infrastructure projects in Haiphong, FDI into northern Vietnam has increased remarkably.
Not only has the north attracted more FDI than the south over the last five years (US$59.19 billion against US$50.8 billion), 2016 was a record year for Haiphong in FDI attraction as the city attracted almost $3 billion, ranking first among all cities and provinces in Vietnam. In the first quarter of 2017, the coastal city attracted more than US$208.5 million in FDI, up 16% against the same period last year.
The economic zone tax package, the advantageous location, and proximity to China are only some of the reasons why companies are deciding to invest in the northern region.
Beluxcham, together with various authorities, Deep C Industrial Zones, and KPMG will be hosting an event that goes deeper into the appeal of the north – called “North Vietnam: How can you benefit from this mega infrastructure cluster” – on April 26 in Ho Chi Minh City.
Seafood exports up nearly 8% in first quarter
Aquatic product exports rose by 7.9% to US$1.51 billion in the first quarter of this year, according to latest statistics from the General Department of Vietnam Customs.
In the period, Japan surpassed the US to become the largest consumer of Vietnamese aquatic products with a revenue of US$252.9 million (up 29.5%), accounting for 16.7% of the country’s total seafood exports.
The US came second with a value of US$251.2 million (down 14.8% against the same period last year) and China ranked third with US$144.47 million (up 17.9%).
In general, seafood exports to global markets saw a decline compared to the same period last year, especially Kuwait (-48%), Romania (-39.5%), Iraq (-57.6%) and Turkey (-35.5%). However, exports to traditional markets still enjoyed a growth, even robust growth, namely Israel (+138.6%), Denmark (+107.2%), and Brazil (+75.1%).
The Vietnam Association of Seafood Exporters and Producers (VASEP) has forecast that seafood exports is likely to increase by 5% to around US$7.5 billion this year. However, it is not an easy task for the seafood sector due to technical barriers to trade, unpredictable development of diseases and the shortage of raw materials for processing.
Meanwhile, the US still considers imposing anti-dumping duties on Vietnamese frozen fish fillets.
350 booths showcased at Vietnam Craft Village Fair 2017
Some 350 booths were featured at the Vietnam Craft Village Fair 2017, which opened on April 17 at Gia Dinh Park in Ho Chi Minh City.
200 booths displayed handicraft products, including wood sculpture, pottery and ceramic and local specialties like Ly Son garlic, Tan Trieu grapefruit and Thai Nguyen Tea.
Ho Chi Minh City set up a corner to show off its craft products and urban agriculture models at the fair, which was held by the Vietnam Craft Village Association.
The event aims to help craft villages and businesses exchange experience and link up, said Nguyen Huu Phuoc, Vice President of the Association, adding that it is hoped to help enterprises expand to markets with high demand for craft products such as the US, the European Union, Japan, the Republic of Korea and the ASEAN Economic Community.
He also noted that Vietnam is home to more than 5,400 craft villages, including 1,864 traditional craft villages.
The villages have provided jobs to some 11 million rural people.
Products from craft villages have been shipped to over 160 countries, he added.
The fair will run through July 23.
Central Highlands establishes itself as agricultural hub of Vietnam
The Central Highlands has become a major agricultural production hub of Vietnam, producing many high-demand products and bringing home multi-billion-USD export revenue.
The region, consisting of Kon Tum, Gia Lai, Dak Lak, Dak Nong and Lam Dong provinces, has a natural area of 54,637 sq.km (5,463,700 hectares). About 74.25 percent of the basalt soil area in Vietnam is in this region.
Annual crops cover 850,100ha of the region’s 2 million ha of farm land, and the remaining 1.15 million ha are perennial plants, according to the Steering Committee for the Central Highlands region.
With favourable natural conditions, the provinces have developed large-scale production areas specialising in coffee, pepper, rubber, cashew, tea, maize and cassava.
The Central Highlands is home to more than 576,800ha of coffee trees (or nearly 90 percent of Vietnam’s total coffee area). Dak Lak has the largest area (over 204,000ha), followed by Lam Dong, Dak Nong and Gia Lai.
Despite prolonged drought in the 2016-2017 crop, the region harvested 2.5 tonnes of coffee beans per hectare on average, three times higher than the world’s robusta coffee productivity. Its total output was over 1.3 million tonnes of coffee beans, 93.3 percent of national coffee production.
The five provinces have applied high technology in coffee production, developed geographical indicators for coffee and promoted connections between farmers and businesses.
Centralised rubber planting areas have also been developed in the Central Highlands. At least 192,207 tonnes of latex are extracted every year, 18 percent of Vietnam’s rubber latex output.
Over 71,000ha of pepper trees and 74,000ha of cashew trees are grown in the region, generating more than 120,877 tonnes of peppercorns and 67,276 tonnes of cashew nuts yearly.
The Central Highlands also posts annual tea output of over 228,000 tonnes, accounting for 24 percent of Vietnam’s tea production. It has also grown 235,226ha of hybrid maize, producing at least 1.3 million tonnes of corn each year or 25 percent of the country’s corn output.
Agriculture has contributed to local socio-economic development, political security and social order and safety and improving ethnic minorities’ living standards.
The Steering Committee for the Central Highlands said more and more successful agricultural production models have been developed in the region, generating from 500 million VND to billions of VND per hectare in income for farmers.
However, local agricultural advantages haven’t been fully tapped, Chairman of the committee To Lam said recently.
He pointed to low labour productivity, unprocessed products with low added value and competitiveness and the lack of science-technology in production, preservation and processing.
To Lam, also Minister of Public Security, asked the steering committee, the Ministry of Agriculture and Rural Development, the Ministry of Planning and Investment, the Ministry of Science and Technology, banks and the regional provinces to issue support programmes and favourable policies for hi-tech agriculture.
Businesses must play a central role in helping the region’s key agricultural products engage in the domestic and global value chains, he added.
He called for amendments to policies on land, investment and credit for agricultural development. Both domestic and foreign economic elements need to be encouraged to step up the processing of main products.
He also highlighted the need to strengthen human resources training for sustainable agricultural development.
VietinBank targets increasing before-tax profit
The Vietnam Commercial Bank for Industry and Trade (VietinBank) targeted increasing before-tax profit to 8.8 trillion VND (382.6 million USD) this year, up 231 billion VND (10.04 billion USD), during its annual shareholders’ meeting in Hanoi on April 17.
Speaking at the event, VietinBank General Director Le Duc Tho said the lender sets the goal of raising its total asset value to 1,081,634 billion VND, marking a 132,935-billion-VND increase from last year. The rate of bad debts will be below 3 percent while the total mobilised capital will reach 996,482 billion VND.
As of December 31, 2016, VietinBank recorded a net worth of 949 trillion VND, up 22 percent year-on-year and equivalent to 107 percent of the target, said Chairman of the VietinBank Board of Directors Nguyen Van Thang.
The before-tax profit hit 8,569 billion VND, or 108 percent of the plan. The dividend rate was 7 percent, amounting to nearly 2,606 billion VND.
By the year-end, VietinBank posted 60,339 billion VND worth of equity, 37,234 billion VND of which was chartered capital, or 94 percent and 76 percent of the plan set by the shareholders’ meeting.
On the occasion, Hiroshi Yamaguchi, deputy chief of the corporate client office from the Bank of Tokyo – Mitsubishi UFJ was elected as member of the VietinBank Board of Directors.
Dialogue focuses on urban development, management policies
The Ministry of Construction, in collaboration with the Organisation for Economic Cooperation and Development (OECD) and the United Nations Human Settlements Programme (UN–Habitat), held a dialogue on urban policies towards a new urban agenda on April 20 in Hanoi.
Participants shared experience and made proposals on feasible urban development and management policies.
Deputy Minister of Construction Nguyen Dinh Toan said that his ministry is completing institutions and a system of legal documents related to urban areas to ensure synchronous development. It also considers building the Urban Development and Management Law and a report evaluating Vietnam’s national urban policy.
Director of UN-Habitat in Vietnam Nguyen Quang said that the national urban policy must balance the demand for equal land access and sustainable environmental issues and effective land use in order to avoid binding agreements on land.
According to him, Vietnam is facing a challenge on land clearance and resettlement, land distribution and registration, together with complicated administrative procedures.
Therefore, it is necessary to define the role and legal responsibility of local authorities to ensure the feasibility of the policy, he said, suggesting the policy be in line with other development policy frameworks, including those related to energy, water, transport, and infrastructure.
The urban system in Vietnam has seen positive progresses over the past 20 years. Urban areas continue to play a core role in speeding up economic structure shifting and become a motivation for socio-economic development. Economic activities in urban areas have created millions of jobs for people nationwide.
Hanoi to host international trade fair for construction
The Vietnam International Trade Fair for Construction – Machinery, Equipment, Technology, Vehicles and Materials (Contech Vietnam 2017) will take place at the National Exhibition Construction Centre in Hanoi from April 25-28.
Vice President of the Vietnam Construction Association Thai Duy Sam told a press conference on April 20 that construction is one of the sectors with the growth rates of above 15 percent in Vietnam over the past few years. The robust growth has made the country a emerging attractive market for construction machinery and equipment in Southeast Asia.
The trade fair will provide a platform for exhibitors to not only introduce new technologies but also seek partners and promote technological transfer, he said, adding that through such interactions, more effective and environmentally-friendly construction solutions will be applied to improve businesses’ competitive advantages.
On display at the fair will be products and services for civil construction, industrial construction and infrastructure; building materials; and technologies, machinery and equipment of transportation and mining industries.
A series of conferences and seminars will be held on the sidelines of the event, including seminars on environmental protection technology in the mining industry, and green, energy-efficient building materials.
It is estimated that about 200 domestic and foreign exhibitors will participate in the fair, including those from the EU, Japan, Singapore, the Republic of Korea, Taiwan (China), Malaysia and China.
VIB records 14% rise in Q1 after-tax profit
Vietnam International Bank (VIB) posted after-tax profit of VNĐ126 billion (US$5.53 million) in the first quarter of this year, up 14 per cent year-on-year.
According to the bank’s business results, released today, its net interest income, net fee and commission income and gain from investment securities also experienced positive growth of 16 per cent, 31 per cent and 21 per cent, respectively.
Debts purchased from the Việt Nam Asset Management Company have been handled well, resulting in a decrease of 2.19 per cent in the bank’s non-performing loan ratio as of March 31, lower than the 2.58 per cent seen at the end of 2016.
Meanwhile, the bank’s provision cost dropped by 8 per cent compared with the same period last year.
VIB’s balance sheet reached nearly VNĐ106 trillion in the first three months, VNĐ 1.4 trillion higher than the same period last year, mainly thanks to good growth momentum of the lending portfolio, the latest data revealed.
Lending balance, including corporate bonds, reached VNĐ73.4 trillion. Of the total, loans to customers rose 5.7 per cent year-on year, or equivalent to VNĐ3.4 trillion.
From January to March, VIB also mobilised deposits worth more than VNĐ4 trillion, including certificates of deposit.
“We have made continuous improvements to our existing product portfolio, developed new products, and simplified processes to provide competitive financial services and products to best meet customers’ needs,” the bank said in its statement.