BUSINESS IN BRIEF 28/7
Vinacomin divestment sees avid foreign interest
Vietnam National Coal and Mineral Industries Group (Vinacomin) plans to decrease its holding in Vinacomin-Power Holding Corporation to 65 per cent from the current 99.68 per cent.
According to Dang Thanh Hai, general director of Vinacomin, investment funds and both foreign and domestic enterprises operating in the power sector may join the purchase. At present, numerous foreign investors from Japan, Thailand, China, and Singapore have expressed interest in Vinacomin-Power Holding Corporation’s shares.
Vinacomin and Vinacomin-Power Holding Corporation will organise meetings with investors in the third quarter of 2017 and expect to conduct the transaction in the fourth quarter.
Vinacomin-Power Holding Corporation currently has the chartered capital of VND6.8 trillion ($298.98 million), equaling 680 million shares with a price of VND10,000 apiece. Thus, the divestment would involve 235.81 million shares worth VND2.36 trillion ($103.75 million).
Operating under the joint stock company form since January 15, 2016, Vinacomin-Power Holding Corporation owns seven power plants with a total capacity of 1,730MW. Besides, Vinacomin-Power Holding Corporation contributes capital to three other power plants, with holdings from 5-10 per cent.
Specifically, the compnay has developed Na Duong 2 thermal power plant in the northern province of Lang Son. Once completed in 2018, the plant, which has a total investment capital sum of $192 million, will have a capacity of 110MW, generating 650 million kWh of electricity each year and helping ensure a stable power supply for Lang Son and other northern border provinces, as well as national energy security.
In 2016, Vinacomin-Power Holding Corporation earned a pre-tax profit of VND244 billion ($10.7 million). The figure of the first half of this year was VND261 billion ($11.5 million).
Tra Vinh strives to attract more investment projects
The economic zone management board of the Mekong Delta province of Tra Vinh is taking a range of measures in a bid to lure at least 3-5 more investment projects in the remaining months of this year.
It also expects that the remaining area of 8 hectares in Long Duc Industrial Park will be fully occupied by investors.
Pham Van Tam, head of the management board, said it will listen to businesses’ opinions, promptly address arising problems within its jurisdiction and improve the quality of verifying and licensing investment certificates.
The board will also cooperate with relevant agencies to accelerate administrative reform in the direction of reducing procedures and efficiently implementing the “one-door” mechanism to create favourable conditions for businesses.
In addition, it will revoke licenses of projects have been postponed for a long time to give land to other capable investors.
Tra Vinh is home to one economic zone and three industrial parks, namely Dinh An economic zone and Long Duc, Cau Quan and Co Chien industrial parks.
The Dinh An economic zone and Long Duc industrial park have attracted 29 projects each with registered capital of 151.36 trillion VND (6.66 billion USD) and 2.64 trillion VND (116.19 million USD), respectively.
State Treasury raises 2.37 trillion VND from G-bonds
The Hanoi Stock Exchange (HNX) has mobilised 2.37 trillion (around 104.4 million USD) by auctioning off Government bonds issued by the State Treasury.
Specifically, the amount includes 1.1 trillion VND worth of 20-year bonds with an annual interest rate of 5.82 percent.
Successfully bidders bought 1.27 trillion VND worth of 30-year bonds with an interest rate of 6.22 percent per annum.
Meanwhile, there was no successful bid for five-year bonds.
Since the outset of this year, the State Treasury has mobilised nearly 141 trillion VND (6.2 billion USD) from issuing Government bonds through auctions at the HNX.
Seagoing vessels to be inspected for safety worldwide
Starting from September this year, port authorities worldwide will carry out comprehensive inspections into foreign vessels to see whether they meet international safety, security and environmental standards.
The inspections until November 30 will take place at ports in five regions, namely West Europe–Northern Atlantic Ocean (Paris-MoU), Asia-Pacific (Tokyo-MoU), Black Sea (Black Sea MoU), Indian Ocean (Indian Ocean MoU) and Latin America (Vina del Mar), according to Vietnam Register.
The common marine safety violations of Vietnamese-flagged ships, according to Vietnam Register, are outdated printed materials, non-notified sea routes, no or not-working signal lights, sirens or voyage data recorders. Violating vessels will be detained by port authorities for repair.
Vietnamese vessels mostly operate in the area of Tokyo-MoU where many ships of Vietnam were detained in the past, Vietnam Register said. Ship owners must examine their own vessels in advance for any issues that can affect maritime safety and avoid detention.
In late 2014, Vietnam’s shipping fleet was removed from the Tokyo-MoU blacklist. In the first half of 2017, more than 3% of Vietnamese-flagged vessels were detained by Tokyo-MoU, so the Vietnamese ship fleet is now in the white-gray list.
Private capital in healthcare sector helps ease HCM City’s budget constraints
Rising private investments in the healthcare sector in HCMC have helped ease the city’s budget constraints, as healthcare demand is increasingly huge while financial allocations for the sector are modest.
Numerous investment projects in the city’s healthcare sector are being implemented in public-private partnership (PPP) format or funded only by the private sector.
Most recently, the HCMC Finance and Investment Company (HFIC), Y Dao Medical Service Consulting Investment Corporation, and District 2 Hospital have struck an agreement to build a high-tech medical examination and treatment facility on the hospital’s campus.
The 100-bed facility, which requires total capital of VND320 billion (US$14.1 million) in PPP form will be equipped with modern equipment such as a magnetic resonance imaging system for early and accurate diagnosis of cardiovascular, spinal and intra-abdominal diseases.
Meanwhile, the HCMC government in April gave District 3 the go-ahead to operate a private clinic investment scheme on a trial basis. The district government has so far teamed up with other relevant agencies to provide professional medical expertise, investment capital, and well-trained doctors to clinics.
As a result, a general clinic of Viet Anh Medical JSC which is situated at a health center in Ward 11 has been operational since May.
The city government has also approved seven city- and district-level hospital projects under PPP mode in 2015 and 2016. They are intended to develop a medical examination and treatment facility at Nguyen Tri Phuong Hospital, upgrade Tan Phu District Hospital, and build Saigon General Hospital, and local hospitals of districts 3, 5, and 7.
The city has also approved a proposal by the Department of Planning and Investment to allow HFIC manage expenses on its own to develop additional facilities at Children’s Hospital 1.
According to the HCMC Department of Health, there are some 80 healthcare projects to be implemented in the city in the 2016-2020 period with huge investment required. However, the city government in a report in mid-May said the State budget could allocate only VND12.5 trillion for healthcare projects in the five-year period, meaning a sizeable amount of investment must come from private sources.
The PPP format is also expected to attract more private funds into the city’s healthcare sector.
HFIC deputy director general Dang Ngoc Thanh said PPP has become an indispensable source of investment for public healthcare facilities. PPP also helps relieve spending pressure on the State budget, and increase incomes of health workers.
Mekong Delta firms advised to foster connectivity for better integration
Mekong Delta enterprises should foster connectivity and cooperation, while strengthening the application of high technology in production and business, said Vo Hung Dung, Director of the Vietnam Chamber of Commerce and Industry in Can Tho city.
Addressing a conference in Can Tho city on July 26 to seek measures for regional businesses to adapt with changes of the world economy amidst the fourth industrial revolution, Dung noted that Mekong Delta region faces many difficulties in infrastructure, logistics and technology.
He held that the fourth industrial revolution will benefit regional firms by reducing labour cost, increasing productivity, thus improving profit.
Sharing Dung’s opinions, Nguyen The Quang, Vice Director of the E-Commerce and IT Department under the Ministry of Industry and Trade, mentioned the “sharing economy” model, which is proving its efficiency in many countries in the world.
He cited the success of IT-based businesses such as Grab, Uber, Trip me and Ahamove, which aims to share cost and increases profit, adding that regional firms can learn the model for better integration.
Huynh The Du, Director of the Fulbright Economics Teaching Programme, noted that so far this year, the region has had 4,275 new enterprises, up 110.5 percent over the same period last year, with total investment of 30.81 billion VND, a rise of 122.7 percent.
However, the number of dissolved firms were 2,426, an increase of 114 percent year on year, he said.
He analysed that the majority of local businesses are specialised in agriculture with small and medium scale and vulnerable to competition in capital, technology and human resources. He highlighted the need for specific support policies suitable to each locality to guide local firms in sustainable growth.
Du stressed that enterprises should be updated themselves on business laws, especially financial and fiscal policies, to avoid legal violations and the missing of support policies for their firms.
Mekong Delta sees drop in Fall-Winter rice areas
Mekong Delta provinces cultivated 355,400 hectares of Fall-Winter rice crops by mid-July, an 8.7 percent drop from the same period last year, according to the Ministry of Agriculture and Rural Development.
The largest rice areas were reported in Dong Thap, Kien Giang, Hau Giang and Long An provinces and Can Tho City.
Some provinces advised farmers to only grow rice in lands surrounded by good embankments to escape floods; and to ensure a proper period of time between crops.
Vietnam has cultivated more than 2.12 million hectares of Summer-Fall rice crops during the period, up 2 percent year on year. Southern provinces contributed to approximately 90.6 percent of the total area and those from the Mekong Delta accounted for 77.6 percent, down 2.3 percent year on year.
The contraction was largely due to farmers shifting to grow annual and perennial plants.
The later-grown Summer-Fall rice areas have reached the stages of heading and flowering while the early-grown crops have been harvested in an area of 663,700 hectares, accounting for 34.5 percent of the total areas, including 654,300 hectares in the Mekong Delta.
The yield was estimated at around 58.7 quintals per hectare.
Northern Vietnam has finished cultivating its winter rice crop with the early-grown areas in the stage of tillering.
HCMC to handle half done projects in downtown area
The HCMC People’s Committee has required the Department of Construction to review and handle half done property projects in District 1.
The committee has assigned the agency to send a document requiring investors of these projects to resume construction within six months starting from the date the announcement was made.
If investors do not restart construction beyond the above time limit, the agency will base on regulations in the construction field to consider and handle each specific case.
According to the city People’s Committee, three incomplete projects have affected urban landscape comprising Saigon One Tower at 34 Ton Duc Thang street. Eighty percent of the work volume has completed but it has been immovable since 2011 because of internal conflict.
The second project locates at 23 Le Duan street, successfully auctioned by Tan Hoang Minh Company in 2015 with the price of VND1,430 billion (US$62.91 million).
While the project was waiting for investment certification, the city People’s Committee’s Decision 09 on construction of essential works became invalid. Therefore, the project has delayed until now. The city is assisting land use right certificate granting for the investors to carry out the project.
The third project at 8-12 Le Duan has been halted because of an inspection decision.
HoREA proposes changes to Land Law
The Ho Chi Minh City Real Estate Association (HoREA) has released a document on amending and supplementing a number of issues in the Land Law 2013, including a proposal to change the mechanism for land use fees.
The law took effect on July 1, 2015 and has had a positive influence on the economy and the real estate market, contributing to protecting the legitimate rights of land users.
But after three years of implementation there remain many deficiencies that need to be amended or supplemented, especially regarding land use fees.
According to HoREA, the land use fee problem is a “bottleneck” for the property market and a burden that real estate businesses and owners both shoulder.
There is also a lack of transparency, with investors being unable to predict the fees prior to making investment decisions. The “ask-give” mindset also prevails.
HoREA therefore proposed changes to the mechanism for land use fee calculations to cut housing costs, increase transparency, and eliminate the “ask-give” mindset in the property market.
In order for the market to fully function in Vietnam’s market economy, HoREA also proposed two modifications. First, viewpoints on land use fees must change and such fee should be considered as a tax, as suggested by the Ho Chi Minh City People’s Committee. Land use fees should be removed in the long term and replaced with a land use tax at certain rates, suggested at about 10 or 15 per cent of the listed land price. The application of a land use tax would help businesses and purchasers, according to HoREA. Businesses would also be able to predict the land cost when investing in projects and the State, meanwhile, would have a stable, long-term source of tax income.
Second, enterprises should be allowed to participate in the process for determining land use fees and the process for preparing and evaluating land prices should be shortened from three years to one year.
HoREA also proposed the removal of the annual land price list, replaced by a land price list valid for five years.
Real estate inventory down in Q2
Total real estate inventory in Vietnam stood at about VND27.3 trillion ($1.2 billion) as at the end of the second quarter of 2017, down VND3.6 trillion ($167 million), or nearly 12 per cent, year-on-year, according to a report from the Vietnam Real Estate Association (VnREA).
The report noted that the higher inventory is in residential land, with more than 3.3 million sq m worth VND13 trillion ($593 million), followed by low-rise housing with 3,447 units worth VND7.268 trillion ($330 million). Apartment inventory was 3,200 units worth VND4.5 trillion ($208 million), while commercial land totaled 648,139 sq m, worth VND2.48 trillion ($112 million).
The Housing and Real Estate Market Management Agency at the Ministry of Construction said that the process of cutting inventories has slowed and are primarily in projects far from city centers with inadequate infrastructure.
Hanoi and Ho Chi Minh City have the largest inventories, accounting for nearly 40 per cent of value.
The report also revealed that in the second quarter, more than 6,700 apartments were introduced for sale in Hanoi, mostly in the districts of Bac Tu Liem, Nam Tu Liem, Ha Dong, Hoang Mai, and Thanh Tri, accounting for 63 per cent of total new supply.
The mid-end apartment segment has a large supply, with many projects conducting sales in the second quarter, such as T&T Riverview, Viet Hung Green Park, Ecolake View, Imperial Plaza, An Binh City, FLC Tay Mo, Gelexia Riverside, and Riverside Garden.
Total apartment transactions in the second quarter in Hanoi were for 5,417 units on a total of 406,240 sq m and worth VND11.3 trillion ($517 million), with the affordable housing segment leading the way, accounting for 55 per cent of total transactions.
In Ho Chi Minh City, total apartment transaction in the first six months of 2017 reached 9,827 units, equivalent to 751,385 sq m. Total transaction value reached VND25.88 trillion ($1.17 billion) with the mid-end segment leading the way, accounting for 47 per cent of total transactions.
Projects include The Art, Citisoft, LuxGarden, Celadon City, Green Town, Binh Tan, Sun Square, Conic Skyway Residence, and The Golden Star. High-end projects initially introduced included Sophia Garden, Lancaster Lincoln, Sensation, and Republic Plaza.
TPBank introduces IA application
TPBank has recently applied an artificial intelligence (AI) application called T’Aio on its Facebook Fanpage to serve its digital banking customers.
It is the first bank to use AI to improve service quality and meet the need to serve customers 24/7.
The response speed of T’Aio is less than five seconds.
When it receives a question from a customer, it analyzes the available answers in the data system and its confidence level about answering the question. If it has a high confidence level, it provides an answer.
If available answers are considered insufficiently reliable, T’Aio will connect customers with a consultant and will automatically record new questions and answers for future responses.
T’Aio can answer questions relating to payment accounts, saving accounts, bank cards, eBank, and LiveBank.
Using Facebook’s general infrastructure, T’Aio is fully capable of responding to over 1.5 million TPBank customers interacting at the same time. The bank expects Facebook will support voice communications technology such as Siri, Cortana, and Google Assistant.
It is preparing plans to integrate T’Aio into its website and eBank and will expand its functions.
T’Aio has already answered millions of questions about TPBank’s products and services 24/7. Development partners include leading technology groups in the world, such as Singtel, Google, and Microsoft.
The bank previously deployed LiveBank in early 2017, to change traditional banking.
General Director Nguyen Hung said that TPBank began to apply LiveBank in Hanoi and Ho Chi Minh City in late 2016; a new banking model used around the world in Germany, Japan, Turkey, and Hong Kong (China). Singapore is the only country in Southeast Asia to use the model.
Financing issue delays Long Son petrochemical project
The $5.4 billion Long Son petrochemical project in southern Ba Ria Vung Tau province has come to a standstill due to a financing problem, according to Mr. Nguyen Vu Truong Son, CEO of the State-owned energy giant the Vietnam Oil and Gas Group (PetroVietnam).
Site clearance has been completed and the investors have selected an engineering, procurement and construction (EPC) contractor for the project, S&P Global Platts quoted Mr. Son as saying.
PetroVietnam now holds a 29 per cent stake in the project while Thailand’s Siam Cement Group (SCG) holds 71 per cent after acquiring the entire 25 per cent interest of Qatar Petroleum International (QPI) earlier this year for $36 million.
The two investors plan to borrow $3.2 billion out of the $5.4 billion from financial institutions, with the remainder being self-financing.
SCG has pledged to provide a guarantee for the $3.2 billion package but it asked PetroVietnam to issue a commitment to Long Son Petrochemicals guaranteeing the 29 per cent portion of the $3.2 billion the Thai partner will borrow on its behalf.
Construction of the project cannot begin, however, as PetroVietnam is prohibited by law from providing a loan guarantee for the Long Son Petrochemicals Company, the investor in the project.
A State-owned enterprise is prohibited from providing loan guarantees for a subsidiary in which it holds less than 51 per cent. Though Long Son is classified as a key project in the oil and gas sector and thus falls under those that may receive government loan guarantees, the government has refused to provide such a guarantee for fears over mounting public debt, according to Mr. Son.
“Construction could begin in August or September if this issue is cleared up,” Mr. Son said, adding that if things go smoothly, the project, which includes a 1 million ton ethylene cracker with a flexible gas and naphtha feed, allowing for an olefin capacity of up to 1.6 million tons per year, is expected to start in 2021.
Licensed in 2008, the complex was initially scheduled to commence construction in 2014 and begin commercial operations in 2017. It has faced several delays due to site clearance and the exit of QPI following a slump in global oil prices in 2014.
Amid a recent crackdown on its loss-making projects, PetroVietnam saw after-tax profit for the first half of this year rise to VND13.1 trillion ($576.3 million), equal to 79 per cent of the annual plan, mainly due to a surge in the global crude oil price and an increase in crude oil extraction to support Vietnam’s economic growth.
The group extracted a total of 7.9 million tons of oil in the first half, 141,000 million tons higher than the half-year target, with some 970,000 tons also coming from abroad, while gas extraction output stood at 5.25 billion cu m.
CJ invests $62mn in food production complex in HCMC
South Korean conglomerate the CJ Corporation has recently announced it will invest nearly $62 million in an integrated production base applying advanced technology in Ho Chi Minh City’s Hiep Phuoc Industrial Park.
A breaking ground ceremony was held recently at the industrial park and once completed in July 2018 the complex will include a processing facility, an R&D center, and a food safety control system.
“CJ sees Vietnam as a strategic market in Southeast Asia,” CEO Mr. Kim Chul Ha said in a statement. “Last year and this year, CJ has focused on investing and expanding in the food business through many M&As in the field of frozen food and seafood processing.”
The complex covers a total area of 66,000 sq m and is set to produce 70,000 tons of food per year. The Vietnam expansion is expected to push the South Korean group’s revenue from the food business to $700 million by 2020.
In the past year and in 2017, CJ has seen remarkable growth in its food business, with the appearance of three new members: Kim & Kim, CJ Cau Tre, and CJ Minh Dat. Through CJ Cau Tre and CJ Minh Dat, the group has also set a target of exporting Vietnamese food and culture to global markets.
With a combination of these three brands, CJ has officially embarked on the construction of a large-scale food complex, applying advanced technology to boost innovation in Vietnam’s food production industry.
In the latest move, CJ last month held a launch ceremony for an agricultural processing plant in south-central Ninh Thuan province primarily focusing on chili processing, with total investment capital of $650,000.
CJ acquired kim chi distributor Ong Kim in January 2016 and bought a 47.33 per cent stake in Cau Tre Foods later in the year. In April 2017, it increased its ownership in the Ho Chi Minh City-based company to 71.6 per cent.
The Ninh Thuan plant covers an area of 640 sq m and has a capacity of 500 tons of chili powder each year. Processed under CJ’s strict conditions, products from the plant will be the main material source for the group’s food industry.
In March 2017, it spent $13.44 million acquiring a controlling stake in Minh Dat Food.
It also secured a 4 per cent holding in Vietnam’s leading meat processor Vissan, when the State company conducted its IPO in March 2016. It competed with homegrown food platform Masan in the race for a 14 per cent stake but lost out.
Ha Nam licenses domestic and foreign projects
The Ha Nam Provincial People’s Committee issued investment certificates to foreign and domestic investors with projects totaling over VND4.6 trillion ($202.33 million) in capital on July 26.
Projects include the U1 University from South Korea in Phu Ly, with investment of $45 million to train 4,200 students year, and a pork project from Masan at the Dong Van IV Industrial Zone in the northern province with a processing capacity of 600,000 pigs per year.
The Tan Port - Dong Van III Construction Joint Stock Company project belonging to the Tan Cang - Dong Van Ha Nam Joint Stock Company, in logistics services and warehousing at the Dong Van III Industrial Park and capable of conducting goods clearance on 37,000 TEUs per year and with investment capital of VND181 billion ($7.96 million), was also licensed, as was a clean water supply project in Duy Tien district belonging to the Ha Nam Clean Water Joint Stock Company with the capital of VND2.6 trillion ($114.35 million).
In the first half of this year there were 317 new enterprises established in the province, an increase of 40 per cent year-on-year, with total capital of VND3.9 trillion ($171.54 million). Two investment promotion conferences were also held by the province - one in Japan and in South Korea - and a meeting with major investors in Ho Chi Minh City.
Ha Nam attracted 52 investment projects in the first half, including eleven foreign direct investment (FDI) projects and 41 domestic projects, with capital of $51.07 million and VND3.5 trillion ($153.94 million), respectively.
The number of workers employed at new enterprises totaled 7,728. Most new enterprises are of small and medium size, however, with low charter capital and uncompetitive products. Some have received land but construction progress is slow.
The People’s Committee also held a meeting with enterprises to hear their opinions, recommendations, and solutions on the difficulties they face in the province.
Ideas from enterprises included support in fees, support for women, support in accessing capital, and measures in tax policy and industrial management.
Provincial leaders addressed questions from enterprises and proposed solutions.
Chairman of the Ha Nam Provincial People’s Committee, Mr. Nguyen Xuan Dong, suggested provincial departments receive further opinions and recommendations from enterprises and provide full answers in the shortest possible time.
Dragon Capital to invest in $44 million solar farm in Can Tho
Solar power field is still a lucrative field as evidenced by a growing number of foreign investors expressing intentions to pour capital into new projects.
Gavin Smith, general director of Dragon Capital, announced plans to build a solar power project with an initial capital of VND1 trillion ($44 million) and a designed capacity of 40 MW in the Mekong city of Can Tho at the working session with representatives of the Can Tho People's Committee on July 25.
The construction is expected to be kicked off in the first quarter of 2018 and completed by 2019.
At present, the group can arrange capital for implementing the project, including its equity capital and loans, however, the specific time to kick-off the construction depends on land clearance and the completion of administrative procedures.
Smith proposed the city to supply an area of 40-50 hectares to implement the project. After the first phase comes into operation, they will continue to develop the second phase and even the third phase.
After the working session, the group will begin conducting the feasibility study.
Early in June, Hanwha and BCG Bang Duong inked a deal to develop a US$100-million solar power project in the southern province of Long An.
Covering an area of 125 hectares in the province, the solar power plant will boast a total designed capacity of 100 MW. The plant is scheduled to be built in the first quarter of 2018 and will generate electricity as soon as in 2019.
Under the agreement, BCG will arrange capital sources, carry out the necessary procedures, study and implement the project, as well as negotiate and sign a power purchase contract with EVN.
Meanwhile, Hanwha will be responsible for providing technology, equipment, engineering, installation, and arranging international financial funds.
As a tropical country, Vietnam has enormous advantages and holds ample potential for solar energy.
The country's residential and commercial solar energy production is estimated to be at least 2-5GW over the next decade.
The capacity of ground solar systems in the south of Vietnam amounted to about 22GW.
Accessing this new source of energy not only contributes to the energy supply, but also helps save energy and reduce environmental pollution.
Cashew nut farmers struggle to profit from fruits of their labour
Vietnamese agriculture, one of the largest processors of cashews anywhere, is on track to import an estimated 360,000 metric tons of nuts this year and export them to the burgeoning European, US and Asian markets.
Cashews had become one of the main cash crops in the country prior to 2016 for many smallholders, said Nguyen Duc Thanh, head of the Vietnam Cashew Association, and in good years had allowed families to earn a decent living.
But unfortunately, in 2016 and again this year, harsh weather combined with the ever-increasing dependence of farmers on imports from Africa resulted in low earnings and growers didn’t benefit much from the fruits of their labour.
Due to the lack of quality nuts available in the domestic market, and low earnings, said Mr Thanh, many smallholders had been forced to shutter their doors and moved on to other cash crops.
Currently, nearly two-thirds of all nuts processed by Vietnamese ag are imported, principally from Africa, he noted, adding that the processing industry in the African continent is continuing to expand making it harder to compete.
West Africa, where 80% of the cashew nuts of the continent are grown is increasingly seeing more multinationals investing in manufacturing plants and processing more of the output.
Last month, Nigeria alone unveiled that six more cashew processing factories will open for business, one each in the states of Enugu, Imo, Benue, Kogi, Kwara and Oyo, which lie on the cashew belt of the continent.
In addition, the Nigerian press reported last month that Walmart and Nigeria announced a 130,000-metric ton deal that could be worth as much as US$7 billion for cashew nut exports to the US market.
This rising dominance by multinationals in Africa very often has and will continue to result in their absorbing the higher quality nuts leaving only lower quality product available for export to countries like Vietnam.
Nguyen Quang Huyen, head of Hoang Son 1 Co, Ltd, a leading cashew nut processor, said the shortage of raw cashews in the domestic market is nothing new for the Vietnamese industry.
He noted that the larger cash heavy businesses in the domestic industry squeeze out the smallholders by buying up all the higher quality nuts at the start of the year and storing in inventory.
Strapped for cash, the smallholders aren’t in any position to compete for domestic produced nuts and the only good option for them is to rely on imports from Africa or close their doors and switch to growing other crops.
It’s important to keep in mind that Vietnam is not the largest producer of cashews, it is only one of the largest processors, and therefore highly dependent on imports, which greatly undermines its sustainability.
Ever since the disruptions to supplies during 2016, Vietnam ag has struggled to process enough cashews to satisfy the high global demand and prices started climbing as a result.
But because there are limited cashew nut supplies, the Vietnam industry is in no position to cash in. Cashew exports from Vietnam have been estimated to have fallen 10% year-on-year during the first months of 2017.
Chinese trade fair opens in Ha Noi
The 2017 Zhejiang export fair will be held in Ha Noi from August 3 to 5, showcasing the best products from the Chinese province.
The sixth Zhejiang export fair, organised at the Ha Noi International Exhibition Centre on Tran Hung Dao Street, will feature 150 booths of nearly 100 well-known businesses, Trinh Xuan Tuan, deputy general director of event organiser Viet Nam National Trade Fair & Advertising Company (Vinexad), said during a meeting held on Tuesday.
Products on display will include machinery, electronic equipment, construction material and interior decoration furniture, as well as textiles and garment material and consumer products.
With the slogan "Zhejiang Made-All Need" the Zhejiang export fair has been held in many countries, such as Japan, Dubai, Czech Republic, Iran and Malaysia. Viet Nam is a gateway for Zhejiang’s import and export transactions and investment in Southeast Asia in particular and Asia in general.
The fair will also be an opportunity for businesses to seek partnerships and serve as a bridge to further promote economic and trade relations between Zhejiang Province and Viet Nam. Zhejiang is a coastal province located in southeast China with ideal natural conditions. It has posted rapid economic growth in recent years and boasts economic relations with over 230 countries and territories around the world.
Trade turnover of Zhejiang and Viet Nam reached US$6.7 billion, an increase of 12 per cent over 2015.
By the end of 2016, 186 Zhejiang enterprises were investing in Viet Nam with total investment of $1.68 billion. Meanwhile, Viet Nam set up 26 firms in Zhejiang with total investment of $20 million.
Beware of pitfalls while eyeing Eurasia windfall: experts
Vietnamese businesses should be aware of the potentially huge pitfalls of trading with the Eurasian Economic Union (EAEU), and the importance of tackling these together, experts said at a conference on Tuesday.
Representatives from the Ministry of Industry and Trade (MoIT) emphasised at the conference that Viet Nam’s producers and exporters must be aware of both the pros and cons of conducting trade with the Eurasian Economic Union (EAEU).
The conference was held to mark one year of the Vietnam-Eurasia Economic Union Free Trade Agreement (VN-EAEU FTA).
Ngo Chung Khanh, Deputy Director of MoIT’s Multilateral Trade Policy Department, said that his chief concern was the trigger safeguard measure within the EAEU in the textile and furniture industries and its effect on Vietnamese exports to this market.
He asked Vietnamese textile exporters to be extremely careful of this safeguard mechanism, and only allow a limited number of consignments to be shipped out to the EAEU each year. He warned that should one company break the rule, all will suffer the consequences.
Khanh explained that even though the EAEU had agreed at the start of negotiations to bring tariffs down to zero per cent with no rule of origins requirement for thread or fabric, as in other FTAs that require the whole product to be made in Viet Nam from scratch, the bloc was not in total favour of opening its textile market to Vietnamese goods.
As such, they apply a trigger mechanism that takes effect if the total export turnover from Vietnamese producers to the EAEU grows to twice the average volume that Viet Nam has exported to the region over the last three years.
If Viet Nam’s textile export exceeds this volume, the EAEU will conduct an investigation to decide whether to apply tariffs of 20 per cent instead of zero per cent.
Khanh also stressed the importance of following the rules set by the VN-EAEU FTA, one of which is the prohibition on dividing shipping consignments between different countries.
This means for a shipping container to be subjected to the zero per cent tariff treatment, it must be shipped directly and wholly from Viet Nam to an EAEU member, even if it belongs to a multinational company with factories in many countries.
The EAEU has also made it clear that should any company forge a certificate of goods origin, the entire industry may be forbidden from exporting to their market.
"Altogether, these risks mean that Vietnamese producers in all fields must band together to ensure their rights and benefits, as well as the benefits to the sector as a whole," said Khanh.
Duong Quoc Thanh, Partner at the DIMAC Independent Law Firm, said that EAEU member countries, especially Russia, are concerned about the consistency of Vietnamese products’ quality, so businesses should keep this in mind and respond accordingly.
With the EAEU’s rising influence, Vietnamese firms are gaining market share in this region through the signing of the VN-EAEU FTA in October 2016.
Along with other FTAs, it elevated Viet Nam’s status among East Asian countries, as the country was the first in the ASEAN community to sign an FTA with the EAEU.
In addition to favourable conditions for the fabric, textile and garment industry, the VN-EAEU FTA also brings up to 90 per cent tariff reductions for other export sectors like seafood, footwear, handbags and suitcases.
Tuesday’s conference was jointly organised by the Hanoi Centre for Small and Medium Enterprises Support, Hanoi Department of Planning and Investment under the Department of Planning and Investment and the Hanoi Supporting Industries Business Association (HANSIBA).
Taiwan Expo 2017 features green tech
Taiwan Expo 2017, which opened on July 26 at the Saigon Exhibition and Convention Centre in District 7, offers opportunities to explore partnerships between enterprises of Taiwan and Viet Nam in many fields, including healthcare and business production.
The exhibition, with the theme “Greener Tech-Smarter Life” is organised by the Taiwan External Trade Development Council (TAITRA).
It has attracted 150 Taiwanese exhibitors including ASUSTek Computer Inc, Acer Incorporated, AAEON Technology Inc, Advanced Green Biotechnology Inc, Animal Health Research Institute, Healthcare Industry Development Association Across The Straits, and Unitech Electronics.
They are displaying advanced green technologies and equipment for food processing, plant seeds, biological pesticides, aquatic vaccines and deep-sea fishing equipment.
Vu Tien Loc, chairman of the Viet Nam Chamber of Commerce and Industry (VCCI), said: “The Taiwan Expo 2017 will help Vietnamese consumers and enterprises access advanced environmentally friendly technologies useful for life and production, matching the country’s policies on green growth”.
The exhibition showcases not only technologies made in Taiwan but also products and machines made in Viet Nam in co-operation among Vietnamese and Taiwanese enterprises, Loc said.
Viet Nam imports many products from Taiwan, including machines and equipment for business production, according to VCCI.
As of May, Taiwan had 2,526 investment projects worth a total of US$32.4 billion in Viet Nam.
Petrolimex to launch non-cash payment service
Domestic ATM card holders of 41 National Payment Corporation of Viet Nam (NAPAS) member banks can pay by card at Viet Nam National Petroleum Group (Petrolimex)’s petrol stations nationwide from August 1.
The card payment service is connected via PG Bank’s Point-of-sale (POS) system at Petrolimex petrol stations.
The move was announced after Petrolimex inked a co-operation agreement with NAPAS and PGBank in Ha Noi yesterday.
Chairman of Petrolimex Bui Ngoc Bao said that the co-operation with NAPAS would raise its service quality at petrol stations nationwide and strengthen management capacity and transparency as the company looks to build a modern petrol station system.
“This is also common trend of the era of the industry 4.0, which will push the development of non-cash payment model in Viet Nam. This payment model creates advantages for not only businesses and banks but also customers who enjoy conveniences,” said Bao.
According to a report of the National Traffic Safety Committee, Viet Nam has nearly 3.2 million cars and more than 48.3 million motorbikes operating in the country. A majority of them use fuel supplied by Petrolimex.
With the use of ATM cards, the customers can manage their fuel costs via their bank statements. In addition, this can also enjoy promotional programmes, including discounts when they buy fuel, Bao said.
Deputy General Director of NAPAS Nguyen Dang Hung said he expects the connection of domestic cards between the corporation’s banking members and Petrolimex will help boost the non-cash payment model.
Vietnam boosts trade promotion in Argentina, Paraguay
The Embassy of Vietnam in Argentina and the Argentinean Confederation of Medium Enterprises (CAME) jointly held a business workshop in the country’s capital city of Buenos Aires on July 25.
The event saw the participation of 60 enterprises from the two nations.
Addressing the opening ceremony, CAME President Fabian Tarrio highlighted Vietnam’s potential and room for trade exchanges between the two nations, expressing his hope that CAME will become a bridge to connect the two sides’ enterprises, contributing to raising their bilateral trade value.
For his part, Vietnamese Ambassador Dang Xuan Dung underlined the remarkable growth rate of 20 percent on average during 2012-2016 of the economic–trade relations between Vietnam and Argentina since the Vietnam – Argentina comprehensive partnership was established in 2010.
He noted that Argentina is one of the most important partners of Vietnam in Latin America.
According to the Ambassador, the 45th anniversary of the diplomatic ties in 2018 will be an important milestone in the long-term comprehensive cooperation between the two nations.
He suggested the two sides play a more active role in the Association of the Southeast Asian Nations (ASEAN) and the South America’s Trade Bloc MERCOSUR, in order to help each other enter the market in those two regions.
Tran Duy Dong, Director of the America Market Department under the Ministry of Industry and Trade said Argentina is a potential market for Vietnamese key exports such as footwear, garment-textile, wood products, and handicraft.
Vice versa, with a population of nearly 100 million people and increasing purchasing power, Vietnam is also a promising market for Argentinean exporters, Dong said, expressing his hope Argentina will support the negotiation on a free trade agreement between Mercosur and Vietnam.
Gustavo Martino from the Argentinean Foreign Ministry lauded the dynamic development of Vietnam, particularly in manufacturing, and said the two countries’ firms can connect with each other to bring their products to Asian and Latin American nations.
The event witnessed the signing of several contracts between the two nations’ enterprises, mostly in wood materials and animal feed. Argentinean firms expressed their interest in Vietnam’s garment-textile products, coffee and electric bulbs.
As part of a trade promotion programme in Argentina from July 23-27, the delegation of Vietnamese firms visited the 2017 Argentina Agriculture Fair and the Pilar Industrial Park in Buenos Aires.
Previously, the delegation held several trade promotion events in Paraguay, with the support of the Commerce Office under the Embassy of Vietnam in Buenos Aires.
Indonesian embassy promotes palm oil, paper trade with Vietnam
The Indonesian Embassy in Vietnam held a seminar in Hanoi on July 26 with the aim of linking the two countries’ businesses in the trade of palm oil and paper.
Addressing the event, Ambassador Ibnu Hadi said that the relations between Vietnam and Indonesia have been growing. In 2016, two-way trade reached 5.6 billion USD, he noted, added that the two sides agreed to lift up the figure to 10 billion USD in 2018.
Vietnam mostly exported to Indonesia telephones, iron, steel, machineries, equipment, rice, computer, electronics and spare parts, garment, leather and footwear materials, vehicles, plastics and plastic material.
The ambassador said that last year, paper was the third largest goods that Indonesia exported to Vietnam with revenue of 181 million USD, followed by animal and plant oil with 161 million USD.
In order to beef up the Vietnam-Indonesia cooperation, especially when the ASEAN Community has been formed and the region has experienced many significant changes, the two sides should increase the exchange of information and investment promotion as well as the connection among businesses, thus improving the competitiveness of ASEAN enterprises, he said.
Meanwhile, Pham Quoc Manh, public relations official of the Indonesian Embassy said that last year, Indonesia ranked 14th in the worth in terms of export of paper, mostly printing paper, with revenue of 3.2 billion USD.
Indonesia is also the world top exporter of palm oil as the country provides 36 million tonnes out of total 56 million tonnes exported by countries around the world, or 62 percent, he added.
At the event, Indonesian Embassy officials also shared information on cooperation opportunities in palm oil and paper trade with participating Vietnamese businesses.
Project on credit institution restructuring gets PM’s approval
The Prime Minister has issued Decision 1058/QD-TTg approving a project on restructuring the system of credit institutions in combination with settling bad debt for the 2016-2020 period.
The project aims to restructure credit institutions and settle bad debt on the principles of ensuring the interests of depositors and maintaining the stability and safety of the banking system, and reduce the number of badly performing credit institutions.
Overall solutions include completing the legal framework, perfecting policies and mechanisms related to monetary and banks’ operations, improving the financial and business administration capacity of credit institutions, and bettering inspections and supervisions over banks’ operations.
The project stresses the need to improve the capacity of the State Bank of Vietnam (SBV) to make early warning of systematic risks and to prevent the risk of law violations of credit institutions and foreign banks’ branches.
Inspection work will be reformed on the basis of using new risk control tools and methods.
The project also puts forward orientations and measures to restructure commercial banks in which the State holds more than 50 percent of chartered capital, and improve operations of joint stock commercial banks, financial and financial leasing companies.
For bad debt settlement measures, the project asks the SBV, ministries, localities, credit institutions, Vietnam Asset Management Company (VAMC), and organisations and individuals involved to continue implementing the Decision No.843/QD-TTg on settling bad debts of the credit institution system.
Credit institutions are required to review the quality and recovery possibility of outstanding debts, while continuing to restructure debts.
The SBV, ministries and localities are requested to continue implementing measures related to monetary, credit and banking policies and mechanisms, along with solving difficulties for business and production activities, and stimulating consumption.
The SBV needs to intensify inspections and supervisions on credit institutions’ observance of rules on credit, safe operation and debt classification, while the VAMC focuses on classifying borrowers, mortgage assets and loans, coordinating closely with credit institutions in taking back and restructuring debts and selling debts and guarantee assets, and providing financial assistance for borrowers to recover business and production and complete unfinished projects.
The country’s system of credit institutions currently includes State-owned banks, joint stock banks, finance companies, financial leasing companies, foreign credit institutions, co-operative banks, People’s credit funds and microfinance institutions.-
Vietnam sees feasible 3 billion USD export of fruits, vegetables
Vietnam’s vegetables and fruits by mid-July continued to enjoy a rosy export growth, boding well for the export revenue of 3 billion USD for the whole year as forecast.
Latest statistics from the General Department of Vietnam Customs showed that the country pocketed nearly 1.85 billion USD from vegetable and fruit export from the beginning of this year to July 15, surging by 45 percent from the same time last year.
In addition, consumers’ demand for Vietnamese vegetables and fruits will be higher during the Christmas and New Year holidays, auguring well for the country’s export revenue goal.
Vietnamese vegetables and fruits have been present in 60 markets globally. China, Japan, the Republic of Korea (RoK) and the US were four leading importers, accounting for 85 percent of total vegetable and fruit export value.
Shipments to traditional markets witnessed good expansion, including Japan (56 percent), China (50 percent), the US (23 percent), the RoK (15 percent) and Thailand (12 percent). Meanwhile, substantial growth was seen in Hong Kong (102 percent), the United Arab Emirates (81 percent), Laos (78.6 percent) and Russia (54.6 percent).
However, export revenue suffered stark decline in Cambodia (81.8 percent), Indonesia (53 percent) and the UK (42 percent).
Dragon fruit ranked first in export value, accounting for 50 percent of the total fruit export revenue. Binh Thuan province, the country’s largest dragon fruit exporter, has paid heed to developing VietGAP dragon fruit cultivation. Nearly 7,700 hectares of land were zoned off for growing dragon fruit in line with VietGAP standards for exports to fastidious markets like the US and the EU.
Mangos, litchis and longans are also Vietnam’s strategic staples.
The Plant Protection Department under the Ministry of Agriculture and Rural Development is making a beeline for bringing litchis to Japan. It will continue negotiations and complete procedures to ship longans to Australia and New Zealand.
As the largest litchi growing area, Bac Giang province has exported 15,000 tonnes of litchis to China through three border gates of Lang Son, Lao Cai and Ha Giang. Another 13 tonnes have just been shipped to Australia while a batch of litchis has entered Thailand, opening big opportunities for the Vietnamese fruit.
The first batch of 3.5 tonnes of mangoes from northern Son La province underwent irradiation treatment for shipment to Australia. The mangoes, weighing 450-650 grammes each, were purchased by Agricare Vietnam Co., Ltd. at the price of 22,000 VND (0.9 USD) per kilogramme.
According to Lo Minh Hung, Vice Chairman of the provincial People’s Committee, the province has a plan to develop fruit tree cultivation, especially mangoes. Currently, it has some 4,000 hectares of mangoes with total productivity of over 3,000 tonnes.
By 2030, 100,000 hectares will be used to grow fruit trees, half of which will be set aside for mango plantation, he added.
Le Son Ha from the Plant Protection Department said that mango export to Australia will pave the way for the fruit to enter many new markets. The US, the EU, Japan, the RoK and Australia are prioritised markets for trade promotion, he stressed.
Vietnam Farm & Food Expo 2017 kicks off in HCM City
The fifth Vietnam Farm and Food Expo 2017 and Agritech Vietnam 2017 opened in Ho Chi Minh City on July 26 with nearly 200 booths of 120 domestic and foreign enterprises.
The Vietnam Farm and Food Expo introduces outstanding agricultural products, food, and plant varieties of different localities across the country, while the Vietnam Agritech Expo features the latest machineries, equipment and production chains serving agricultural activities. The events are considered the venue for both input and output of Vietnam’s agricultural sector.
Opening the events, Nguyen Phuoc Hung, Vice President of the Ho Chi Minh City Business Association said that the annual exhibitions aim to promote the application of science and technology to improve productivity and quality in agricultural production, while seeking markets for Vietnamese farm produces.
Hung held that this is a good chance for agricultural firms to introduce and promote their products, and form production-supply chains.
Within the framework of the events, the organising board will coordinate with the Department of Agriculture and Rural Development of the Mekong Delta province of Vinh Long to hold a conference on strengthening links for selling farm produces in Vinh Long, in which Vinh Long will introduce its agricultural development potential, especially its fruits for export.
Nguyen Van Liem, Vice Director of the Vinh Long Department of Agriculture and Rural Development said that he hopes through the exhibitions, the province will find out additional distribution channels for its products, thus boosting the sustainable growth of the local agricultural sector.
The events will run until July 28.