Thứ Ba, 19 tháng 9, 2017

BUSINESS IN BRIEF 19/9

Vietnam spends $174 million on auto import per month

 Vietnam spends $174 million on auto import per month, Vietnam not export various sand, Shares maintain upward trend, Rubber exports surge in first eight months, Investment promotion forum held in Brussels

Vietnam spends an average of US$174 million on importing 8,186 automobiles a month, according to the General Department of Vietnam Customs.

During the first eight months this year, the country imported 65,485 CBU (completely built up) automobiles with the total value of $1.39 billion, down 5 percent in volume and 12.8 percent in value over the same period last year.
The year on year decrease partly showed the gloomy auto market for the last months. Despite implementing a slew of discount programs, automakers have seen dropping sales because of new tax policies.
Specifically, import tariff rates of less than nine seater vehicles from ASEAN to Vietnam will reduce from 30 percent to 0 percent by 2018. Therefore, consumers have been waiting for further price drop.

Vietnam not export various sand

Vietnamese Prime Minister Nguyen Xuan Phuc ordered the Ministry of Construction to study how much Cambodia’s ban to export sand affect the country’s construction material market.

Before, newspapers in Cambodia released the government announced a ban on exporting sand permanently for environmental issues while Malaysia had imposed a ban on exports in 1997.
The Ministry was assigned to study on the matter and report to the PM as well as to adopt measures to keep the market’s stability.
Vietnam will maintain its decision not to export sand.

Shares maintain upward trend

Shares on the two stock exchanges opened this week’s trading with gains as investors demonstrated their rising confidence in the market outlook.

On the HCM Stock Exchange, the VN-Index edged up 0.25 percent to close on September 18 at 807.87 points. The key market index rose 0.6 percent over last week and 21.5 percent since the beginning of this year.

On the Hanoi Stock Exchange, the HNX-Index ended up 0.62 percent at 105.13 points.

The northern market index increased 0.54 percent from the previous week while growing 31.2 percent compared to the end of last year.

The overall market breadth was positive with 271 stocks on the two exchanges advancing, 182 declining and 279 remaining unchanged.

Large-cap stocks continued to lead the market upturn as 20 of the top 30 largest stocks by market value and liquidity on the HCM City’s bourse gained value and 10 slumped.

Stocks that made gains include industry leaders such as Vinamilk (VNM), brewer Sabeco (SAB), real estate giant VinGroup (VIC), lender BIDV (BID), Vietinbank (CTG), steelmakers Hoa Phat Group (HPG) and Hoa Sen Group (HSG), IT group FPT (FPT), mobile phone retailer Mobile World Group (MWG) and private equity Masan Group (MSN).

Rises in global oil prices also supported oil stocks, with major companies such as PetroVietnam Drilling and Well Services (PVD), PetroVietnam Technical Services (PVS), PetroVietnam Coating (PVB) and PetroVietnam Drilling Mud (PVC) gaining between 1.2-6.8 percent each.

Oil prices rose for a fifth straight session last week with the West Texas Intermediate (WTI) future increasing 4.9 percent to 49.8 USD per barrel while Brent crude closed with a 3.3 percent rise to 55.5 USD per barrel on September 15.

“This bullish session sent more positive signals than in the earlier weeks with higher capital spreading and a recovery in the market liquidity,” said Tran Duc Anh, a stock analyst at Bao Viet Securities Co.

Anh said investor sentiments have improved with greater purchasing demands even in high price zones.

A total of 254 million shares worth nearly 4.6 trillion VND (202.6 million USD) were traded in the two markets, up 35.5 percent in volume and 15 percent in value compared to last week’s average daily trading volume and value in the two markets.

“It’s highly probable that the current upward trend will be maintained in the short term, with the largest increases from the stocks with supportive information and positive third-quarter results,” Anh wrote in a market report on September 18.

Reference exchange rate revised up

The State Bank of Vietnam set the daily reference exchange rate for VND/USD at 22,443 VND on September 19, up 4 VND from the previous day.

With the current trading band of /- 3 percent, the ceiling rate applied to commercial banks during the day is 23,115 VND/USD, and the floor rate 21,771 VND/USD.

The opening hour rates at major commercial banks stayed the same as on September 18.

At the three major banks – Vietcombank, BIDV and Vietinbank, the buying rate is listed at 22,690 VND/USD and selling rate at 22,760 VND/USD, unchanged for several working days.

Vietnam-China investment promotion forum held in Beijing

The China-Vietnam investment promotion forum took place in Beijing, China, on September 18.

The event was jointly hosted by the China-ASEAN Business Council (CABC), a delegation from Vietnam’s northern mountainous province of Tuyen Quang, and the Vietnamese Embassy in China.

Addressing the forum, CABC President Xu Ningning affirmed that China is currently the biggest trade partner of Vietnam, which is the biggest trade partner of China in ASEAN.

In the first eight months of this year, China was the fourth biggest investor in Vietnam, with 176 projects worth 1.27 billion USD, tripling the amount of the first half of 2016.

He attributed the investment increase to enhanced political relations, incentives and potential of the two economies, noting Vietnam offers cheap labour force, investment incentives and favourable traffic network.

Commercial Counsellor of Vietnam in China Bui Huy Hoang echoed the CABC President’s view on the growing trade and investment cooperation between Vietnam and China in recent years.

He said two-way trade reached 71.9 billion USD in the first eight months this year, up 20.1 percent year on year, of which Vietnam shipped 27.6 billion USD worth of goods to China, a rise of 16.8 percent.

The target of reaching 100 billion USD in bilateral trade this year is completely feasible, Hoang said, expressing his hope that the forum will help Chinese economic and financial institutions, associations and enterprises understanding more about Vietnam and its investment climate, thus increasing collaboration with Vietnamese partners.

Chairman of the Tuyen Quang People’s Council Nguyen Van Son briefed participants about the province’s socio-economic situation, saying that the province is home to numerous Chinese investment projects and those using Chinese technology.

Underlining cooperation potential between his province and Chinese investors, he pledged that Tuyen Quang will create all favourable conditions for foreign investors, particularly those from China, to implement their projects in the locality.-

Deputy PM hails Mitsubishi’s participation in thermal power plant

Deputy Prime Minister Trinh Dinh Dung has praised efforts made by Japanese investors, including Mitsubishi Corporation, in carrying out the Vung Ang 2 thermo power plant project located in the central province of Ha Tinh.

At a meeting with Yoshinori Katayama, Senior Vice President of Mitsubishi, an important shareholder of the project, in Hanoi on September 18, Deputy PM Dung asked the stakeholders to accelerate negotiations on the project in order to facilitate its implementation, ensuring interests of all related parties.

On this occasion, the official reiterated the request that all thermoelectric projects must meet both environmental and technological requirements.

The Government will create optimal conditions for investors to apply state-of-the-art technologies and protect the environment, he stressed.

Sharing the investors’ concerns over factors hindering the operation of the Vung Ang 2 thermo power plant project, Dung assigned the Ministry of Industry and Trade, and Ministry of Finance to team up with the Electricity of Vietnam (EVN) to seek solutions to the pending negotiations.

Yoshinori Katayama thanked the Vietnamese Government’s support for the stakeholders to fast-track the negotiation process, saying the concerned parties have reached consensus on major contents.

The Vung Ang 2 plant has a total capacity of 1,200 MW, with the first turbine to be put into operation in 2021 while the second will become operational one year later.
However, the project is facing some obstacles despite long negotiations among stakeholders.-

TH Group’s organic milk wins international award

The organic fresh milk product of locally-invested TH Group has won the prize of “best new product” at the 26th International Food Exhibition, or World Food Moscow 2017.

According to TH Group, which owns the TH True Milk brand, organic milk product was introduced to consumers from August 17. After launching in Vietnam less than a month and being introduced at World Food Moscow 2017, TH organic milk has quickly gained international appreciation.

This kind of milk is free of residues of pesticides, fertilisers, growth hormones, antibiotics and genetically modified organisms (GMOs).

World Food Moscow is an annual international event held in Russia from September 11 to 14. The event is an opportunity for foreign businesses to promote their goods and seek trading partners in the vast Russian market.

The fair is considered to be a large-scale exhibition of the world with the participation of more than 1,500 suppliers of agricultural products and food from 63 countries.

This is the third time TH Group has participated in this international exhibition. In 2015 and 2016, many of TH’s dairy products were awarded. The group won five gold prizes, three silver prizes and one bronze prize in the last two years’ event.

With international awards, TH True Milk not only asserted its own brand but also contributed to enhance the value of Vietnamese goods in the international market.

TH True Milk is a leading brand in Vietnam’s fresh milk market, launched in 2009. Organic milk product of TH Group represents the leading position of the group in the field of clean milk production on a large scale.

The group inked a deal with the authority of the Moscow region, Russia in October 2016 to invest 2.7 billion USD in hi-tech cattle farming and dairy production projects here.

It is expected that in October this year, TH Group will welcome the first cattle herd to its farm in Moscow and soon launch the brand TH True Milk in Russia.

Rubber exports surge in first eight months

Vietnam earned 1.38 billion USD from exporting more than 800,000 tonnes of rubber in the first eight months of 2017, year-on-year rise of 54.1 percent in value and 12.8 percent in volume.

Export turnover of rubber products in January-August rose 25.5 percent annually to 382.2 million USD.

China continued to be Vietnam’s top export market with 867 million USD, 62.7 percent of the country’s total rubber export turnover in the period.

Malaysia came second with 75.4 million USD and the Republic of Korea was third with 56.7 million USD.

Vietnam remained as the world’s third largest rubber exporter with an estimated export turnover of nearly 4.36 billion USD in 2016.

Former Finnish PM talks innovation-based economic development

Former Finnish Prime Minister Esko Aho delivered a presentation in Hanoi on September 18 about Finland’s experience in economic development based on innovation.

As part of the Vietnam-Finland Innovation Partnership Programme Phase 2 to improve the capacity of Vietnamese policymakers, the event was a follow-up to a presentation made by Prof. Goran Roos in late August.

Opening the event, Minister of Science and Technology Chu Ngoc Anh said to serve demand for renovation, managers and science-technology policymakers should improve science-technology policies in tandem with sustainable economic development in Vietnam.

In his speech, Aho underscored the need to change ideas about knowledge, master future technology and devise strategies for innovation.

In the afternoon the same day, Aho and leaders of the Ministry of Science and Technology discussed science-technology development policies used for economic development.

Aho is also former Chairman of the Finnish Innovation Fund under the Parliament of Finland and former Vice President of Nokia Corporation. He was part of an experts’ group to build the EU’s innovation policies and chaired a group to propose Finland’s innovation strategy for 2008.

In recent years, Finland has been among the world’s top 10 countries in terms of the Global Innovation Index and Global Competitiveness Index. The country was also ranked high in indexes scoring the efficiency of public organisations, tertiary education, corporate innovation and public-private partnership.

Investment promotion forum held in Brussels

A forum was held in Brussels, Belgium on September 18 to promote economic ties between Vietnam and Belgium and other European nations, with more than 100 business representatives in attendance.

Deputy Prime Minister Vuong Dinh Hue, who chaired the event, detailed Vietam’s socio-economic development plans and highlighted the country’s role in connecting European firms with the Asia–Pacific market.

The Vietnamese Government pledges to continue building a transparent, and friendly investment environment for investors, Hue said.

Hue encouraged Belgian and European firms to hasten the signing and ratification of the Vietnam – EU Free Trade Agreement (EVFTA), which is expected to create opportunities for enterprises of both sides, adding that they should invest in the sectors of common interest, particularly manufacturing, hi-tech, infrastructure, environment, finance – banking, agro-forestry-fishery, food processing, energy, ICT, and pharmaceuticals.

The Deputy PM called on investors to study opportunities to become strategic partners of Vietnamese state-owned enterprises during the equitisation and divestment process.

“Nothing can get in the way of boosting relations between Vietnam and Belgium and the EU in general in a stronger manner”, he said.

Belgian and European enterprises expressed their impression at the socio-economic achievements Vietnam has made over the years.

They also showed interest in investment opportunities in Vietnam, and noted the country’s important position in business links between the EU and Asia – Pacific.

They also made recommendations to improve the Vietnamese investment climate, including strengthening dialogues between the Government and enterprises.

Most participants lauded the potential role of EVFTA in creating a legal framework and opportunities for both sides’ firms.
The same day, the Vietnamese official had separate meetings with leaders of a number of groups, namely the Beverage AB InBev Group and the steel wire transformation and coatings Bekaert S.A Group of Belgium and Pharma Group Vietnam.

During the meetings, he informed the groups of Vietnam’s policies on developing sectors relevant to them, and encouraged them to connect with Vietnamese firms to expand operations in the country.

The groups praised the measures Vietnam has taken to create a favourable business environment for foreign investors.
They also reiterated their support for putting the EVFTA into effect soon and will convey this message to the governments of EU member states.

Thai Nguyen lures 63 projects in nine months

The northern province of Thai Nguyen attracted 63 projects in the first nine months of the year, including 53 domestic projects valued at 4.8 trillion VND (211.2 million USD) and 10 foreign direct investment (FDI) ones worth 9.3 million USD.

The province is home to a total 837 projects with total registered capital exceeding 305 trillion VND (13.4 billion USD), including 120 FDI projects valued at 7.2 billion USD.

Thai Nguyen has become popular for both domestic and foreign investors, with FDI enterprises producing spare parts for the high-tech Samsung complex in the locality.

The province granted investment certificates for 15 residential projects in the nine-month period. Large projects include the Green House project, Tan Duc JSC residential area project, Vinaconex 3 residential area project in Pho Yen town and TNG social house project in Thai Nguyen city.

Notable agricultural projects include the Thai Binh Nguyen farm project in Dong Hy district and a pig farm project in Vo Nhai district.

Regarding industry, trade, services and tourism, the province granted business registration certificates to 33 projects, the most remarkable of which are Song Cong wastewater treatment complex in Song Cong city, WOOJINQPD VINA plant in Diem Thuy industrial zone (Phu Binh district) and Golden Tech Vina plant in Song Cong city.

Hoang Thai Cuong, Director of the provincial Department of Planning and Investment, said that projects which were recently put into operation have made significant contributions to socio-economic development, creating jobs for local labourers and giving a makeover to the province’s urban areas.

The department is working with other departments, branches and localities in building transparent processes for the granting of investment registration certificates, he added.

He also stressed that the province will end inefficient and polluting projects.

Vietinbank to pay VND2.6 trillion in dividend to stakeholders
   
The Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) has announced that it will pay cash dividends to the shareholders of 2016.

The payment rate will be 7 per cent, meaning that for each share, the shareholders will receive VND700 (31 US cents). At this rate, the bank will pay dividend worth VND2.6 trillion for 3.72 billion shares held by the stakeholders.

Of the total dividend, the State Bank of Viet Nam, which is holding 64.46 per cent of the bank’s charter capital, as of June 30, 2017, will receive VND1.68 trillion. The Bank of Tokyo-Mitsubishi UFJ, the bank’s strategic investor, will get VND514 billion, thanks to its ownership of 19.73 per cent of Vietinbank’s charter capital.

The dividend is scheduled to be paid on October 17. The last day for the investors to register for reception of the dividend is September 28.

The dividend is subject to individual income tax of 5 per cent, and the dividend that the shareholders will receive is already taxed.

Vietbank named among Top 100 APEC Brands
   
Vietnam Thuong Tin Commercial Bank (Vietbank) has won an award for being among the Top 100 APEC Brands from Viet Nam Integration magazine.

The award has been instituted to honour outstanding entrepreneurs, businesses and brands in the country for building and promoting their brands and improving their product and service quality to strengthen the competitiveness of Vietnamese brands in the Asia-Pacific region and globally.

The inaugural awards attracted the participation of many enterprises, who had to meet several criteria set by the magazine to make it to the list of the top 100 APEC brands.

Ho Phan Hai Trieu, deputy director of Vietbank, said the lender has been trying to create products that meet customers’ needs, accelerate investment in technology and improve service quality.

The award is the best recognition for Vietbank's transformational efforts, he added.

Vinamed buys out Mediplast in all-stock deal
   
The Viet Nam Medical Equipment Corporation (VINAMED) has acquired the Medical Plastic Joint Stock Company in an all-stock deal.

It has issued one share for every three shares held by Mediplast’s stockholders.

Following the acquisition, Mediplast executives will hold key positions at Vinamed.

The company will continue to manufacture and import medical equipment for distribution in Viet Nam.

Over the years Mediplast acquired the capacity to produce a diverse range of products but was plagued by a shortage of resources and managerial skills and lacked relationships with international partners.

Vinamed on the other hand has deep pockets, extensive international relations, good management and a large customer base, making it a win-win deal.

First int’l agro-forestry-fishery exhibition to be held in VN
   
The first International Agriculture–Forestry–Fishery Exhibition (Growtech 2017) will take place in Ha Noi from November 30 to December 2, the organisers have announced.

Jointly organised under the chairmanship of the Ministry of Industry and Trade, with the Ministry of Science and Technology and Ministry of Agriculture and Rural Development, this is the first Growtech event to be held in the country.

The exhibition is the largest and only specialised display of machinery, equipment and technology for farming, harvesting and preserving, bringing together major domestic and international enterprises operating and doing business in related fields.

The exhibition offers opportunities for farmers, fishermen and workers in the forestry sector to experience the latest technology and activities in all three fields of agriculture, forestry and fishery.

Besides displaying and demonstrating important innovation activities, Growtech also contributes to trade promotion in the three fields in Viet Nam.

In the context of globalization, Viet Nam's increasingly active participation in free trade agreements is opening up more great opportunities for domestic businesses.

Growtech was organised with the desire to develop a prestigious connection among industry players and to promote trade activities in the agriculture, forestry and fishery sectors.

Furthermore, the exhibition aims to lead to more national development, with Viet Nam becoming a leading exporter of commodities, agricultural products and food and staying among the top-five exporters with a gradually increasing growth rate in the three sectors.

Up to date, the exhibition has attracted the registration of 150 enterprises with more than 300 booths from businesses from all provinces and cities in Viet Nam, and 10 countries and territories with notable businesses from the UK, Italy, Czech Republic, Israel, Indonesia, Korea, Japan, China and Taiwan, among others.

Hosted at the international ICE exhibition centre, it is expected to have around 450 booths and attract more than 10,000 visitors, delegates and specialists from more than 20 countries and territories, including Viet Nam.

During 30 years of renewal (1986 - 2016), Viet Nam’s agriculture has achieved rapid and stable growth, with a positive shift in agricultural structuring.

From 2016 to 2020, the agriculture-forestry-fishery industry in Viet Nam increased its added value with sustainable development; applied scientific and technical achievements to improve capacity, productivity and quality; promoted commodity production moving towards a modern market economy; and increased its competitiveness and maintained rapid development efficiently and safely to become one of the key leaders of national exports.

Animal husbandry, fish processing, aquaculture, environmental protection and biodiversity conservation are some of the areas that are closely linked to the new national rural development strategy.

International livestock expo set to take place next year
   
The seventh international livestock, dairy, meat processing and aquaculture exposition will bring thousands of people to HCM City in March next year.

More than 8,000 trade visitors are expected to participate and interact with 250 international brands from 30 countries. The exposition, Ildex Viet Nam 2018, is organised by Minh Vi Exhibition and Advertisement Services Co., Ltd. (VEAS) in collaboration with VNU Exhibitions Asia Pacific Co., Ltd. It will take place on March 14-16.

The event is expected to see an increase in both visitors and exhibitors compared to those of 2016, when there were 7,000 visitors and 202 exhibitors.

The area for the exhibition also grows from 6,000 sq.m. at the previous event to 7,500 sq.m. this time.

The show be divided into areas of focus that include animal breeding and genetics, meat processing, animal equipment, farming, feed milling, animal health, animal feed, feed additives and animal nutrition.

The exhibition will also present five country pavilions representing the Netherlands, France, the US, South Korea and China.

The livestock and aquaculture industry is one of the primary economic sectors of our country. In the first half of 2017, it is expected to contribute 0.43 percentage points to the growth rate of the entire economy, according to the Department of Statistics. Officials at the kick-off conference in Hà Nội yesterday said technology will play an important role in the industry’s future.

“Applying new technologies in breeding and aquaculture not only helps to develop the quality of products but also helps to reduce pollution and saving costs,” said Nguyễn Xuân Dương, deputy director of the Department of Livestock production under the Ministry of Agriculture and Rural Development. However, application of these technologies still has many limitations and the industry is currently inefficiently developing its potentials.”

“I also believe that through this exhibition, businesses and companies will have opportunities to compare our proficiency with our competitors as well as find new partners for collaboration,” he added. “Business could also get chances to become an import agent or distributor for many international partners,” he added.

Speaking at the conference, Nino Gruettke, managing director of VNU Exhibitions Asia Pacific Co., Ltd said that Viet Nam’s rising population, income levels, changing cultural preferences and new trade agreements had opened the door to significant growth in the meat industry.

“The livestock market in Asia is growing rapidly and this trend is expected to continue in the foreseeable future,” the director said. “The important countries in Asia which have the rapid economic growth rate that global investors keep an eye on are the Philippines, Singapore, Thailand, Cambodia, Laos, Malaysia and Viet Nam.”

He also noted that the global business trend now was how to integrate livestock and agribusiness together and drive business with IT, automation and Internet systems. Growing populations meanwhile demand agribusiness innovate quickly to keep up with demand.

“This is the important point that all product business have to realise and find the solutions to increase the productivity and feed the world in the limited space,” he said.

HCM City set to host medical supplies expo
   
More than 400 businesses from 25 countries and territories will take part in the 12th International Exhibition on Products and Supplies for Medical, Pharmaceutical, Hospital and Rehabilitation – Pharmed and Healthcare Viet Nam (Pharmed and Healthcare Viet Nam 2017) that opens in HCM City on September 20.

At the four-day event exhibitors will display their latest pharmaceutical products, drug manufacturing and packaging machinery, medical equipment and supplies, beauty products and services, medical environment treatment equipment and supplies in over 600 booths.

The annual exhibition is aimed at creating a platform for companies and specialists to exchange knowledge and seek business opportunities.

It has now become the most anticipated annual event in the field of health, and attracts exhibitors from countries and territories including the UK, Australia, Canada, Germany, France, the Netherlands, Russia, the Czech Republic, Sweden, South Korea, Japan, India, China, and Malaysia.

The exhibition will focus on five main themes: pharmex, including pharmaceuticals, ingredients for drug manufacturing and packaging machinery and eastern medicine; medex, where displays will include hospital equipment and diagnostic, surgery, emergency, physiotherapy, orthopaedic, ophthalmic, dental, and medical consumables; hospex covering medical examination and treatment; analytex; and beauty care.

According to the organisers, for the first time a free screening and diagnostic programme will be run by doctors from HCM City’s District 2 Hospital and University Medical Centre.

It will focus on cardio-vascular diseases and diabetes, especially cardio-vascular disease screening for adults and congenital cardio-vascular diseases in disadvantaged children.

Pharmed and Healthcare Viet Nam 2017 will be organised by the Ministry of Health, ADPEX Joint Stock Company, Central Health Communication and Education Centre, Viet Nam Pharmaceutical Companies Association and Viet Nam Medical Products Import – Export Joint Stock Company.

Last year it had attracted over 10,500 visitors.

It will be held at the Sai Gon Exhibition and Convention Centre, District 7.

New direct air route links Hanoi, China’s Jiangxi province

A flight connecting Hanoi and Nanchang, capital of east China's Jiangxi province, has just been launched at Noi Bai International Airport.

The route is hoped to boost economic and tourism cooperation between the two localities.

The direct route helps shorten the air travel time between the two cities to three hours from six hours previously.

Run by Chinese low cost carrier Lucky Air, the flight operates every Wednesday and Sunday.

Prior to the direct route, flights from Nanchang to Vietnam stop over in other Chinese cities such as Xiamen and Wuhan.

Korean firms prep for new TP decree

In the face of regulatory changes regarding transfer pricing in Vietnam, multinational corporations from the Republic of Korea are proactively preparing to ensure compliance with the new tax law.

Accounting for approximately 26% of all foreign direct investment (FDI) in Vietnam last year, Korean investment – which started in the 1990s – has transitioned from labour-intensive manufacturing to high value-added sectors such as power, real estate, and retail.

According to Ha Do, senior partner at KPMG in Vietnam, Korean investors are starting to pay greater attention to tax regulations with regards to corporate income tax (CIT), and are increasingly concerned about investment incentives and the health of the economic environment.

Korean subsidiaries and multinationals investing in Vietnam, whose transactions are often under scrutiny from the tax authorities when it comes to transfer pricing (TP) arrangements, are familiarising themselves with the details of Decree No.20/2017/ND-CP, which provides guidance on transfer pricing management of intra-group service charges, interest, payments for intangibles, and capital expenditures, among other transactions.

“Along with the increased FDI, there is a rise in two-way trade, which naturally creates related-party transactions between the parent companies, affiliates, and subsidiaries.

Determining appropriate arm’s length transfer prices of these transactions for tax purposes will not just be the job of the businesses themselves, but also the tax authorities in both jurisdictions,” said Hoang Thuy Duong, partner in charge of Integrated International Tax at KPMG in Vietnam, on the sidelines of a briefing on TP and customs for Korean businesses in Vietnam in early September.

Duong pointed out new TP reporting and documentation requirements, which are now more complex and in line with the Organisation for Economic Co-operation and Development’s (OECD) recommendations against base erosion and profit shifting (BEPS).

A TP documentation package, which should now include a master file, local file, and a country-by-country report, is to be prepared before Vietnam’s annual CIT finalisation deadline. Should a TP audit be required, such a package is to be submitted within 15 working days upon request by the tax authorities.

Jung Goo Kang, vice president of the electronics and technology firm Elentec Co., Ltd. – which owns subsidiaries in Hanoi and Ho Chi Minh City and is a main supplier for Samsung Vietnam – has experience in logging both Korean and Vietnamese TP audits.

He told VIR that while the transfer pricing rules are the same in theory, the local regulations are more complicated in the sense that tax authorities in different countries do not follow the guidelines in precisely the same way.

“Many of our Korean clients in Vietnam are concerned about double taxation and the uncertainty that follows due to differing views and audit practices maintained by the Vietnamese and Korean tax authorities,” said Seung Mok Baek, a partner specialising in TP at KPMG in South Korea. “TP audits conducted in Vietnam recently have been quite aggressive, and in many cases huge amounts of additional taxes were due as a result of these audits.”  

“Korean firms experienced difficulties in solving double taxation issues through the Vietnamese local appeals process and Vietnam-Korea mutual agreement procedures (MAP) – mainly used as an international ‘appeals’ process for the relief of double taxation occurring due to TP adjustments in recent years in the contracting states,” Baek added.

In the opinion of Gil Won Kang, partner in charge of Global Transfer Pricing Services at KPMG in the Republic of Korea, since the introduction of BEPS, Korean firms in Vietnam are increasingly concerned about double taxation following TP tax audits.

It is his hope that the Vietnamese tax authorities will take the concerns of foreign investors seriously through implementation of an APA (Advance Pricing Agreement, mainly used as a proactive measure to eliminate uncertainties regarding TP in future tax years) and MAP procedures.

“As the new regulations have only come into force in 2017, it might take some time for the capacity building of tax officers. This is a complicated matter,” Duong added.

Exports to China on sharp rise in 8 months

Exports to China jumped 45% to US$18.73 billion in the first eight months of this year, accounting for 14% of Vietnam’s total export revenue, according to the General Department of Vietnam Customs.

Six groups of products brought a total export value of more than US$10.5 billion. Computers, electronics and components topped among export products with US$4.04 billion, up 100% against that in the same period last year, followed by fruits and vegetables with US$1.79 billion (up 62%), telephones and components with US$1.35 billion (up 137%), fibres with US$1.3 billion (up 26%), machines, equipment and tools with US$1.07 billion (up 58.5%), and cameras, film cameras and components with US$1.04 billion (up 42%).

It’s noteworthy that paper and paper products saw the highest growth of 811% to US$22.25 million.

Besides, other products enjoyed high export growth of over 100% like steel (up 116%), electric wires and cables (up 136%), clinker and cement (up 155%).

However, some products suffered a decline such as coffee (down 24% to US$56 million), tea (down 36% to US$9 million), and crude oil (down 23% to US$685 million).

Thien Long's ball-pen business expands overseas

By focusing on localisation through distribution channels and research and development (R&D), Thien Long Group Corporation (Thien Long) has gained significant market share in Myanmar and now targets to expand its business in other foreign markets.

After seven years of working on penetrating the local stationery market, Thien Long achieved a solid standing in seven states and seven administrative divisions of Myanmar, attaining an estimated turnover of $2.8 million in 2017, a 57 per cent increase against 2016 revenue.

Two leading product lines that Thien Long planned to export to Southeast Asian countries are Flexoffice and Colokit. The stationery market in Myanmar amounts to roughly 50 per cent of the group’s total export revenue.

The key for Thien Long to conquer targeted markets is concentrating on local distribution channels and the implementation of research and development (R&D) in the targeted country.

With 30 years of experience in the stationery field, variables Thien Long included in their equation of success have three main components: selecting appropriate products, seeking compatible business partners, and supporting distributors and business partners.

Thien Long’s R&D strategy was specifically designated for each country. Take Laos and Cambodia for example. By living side-by-side with them instead of as expatriates, Thien Long’s R&D team managed to grasp an understanding of local consumption dynamics, gaining a decisive edge over competition.

Tran Huynh, business development manager at Thien Long, shared, “We cooperated with distributors to set up and develop our business through trading and marketing. Had we partnered up with more distributors at the beginning, the group would have achieved over 50 per cent of market share.”

The group’s next target is to attack the Asia-Pacific and Africa which appear to be the two most prospective markets in the next decade. Thien Long’s long-term objective is to continuously improve product quality to accomplish more and set a foothold in new markets.

$1-billion Hemaraj IP may open ahead of schedule

The construction of WHA Hemaraj Industrial Park (IP) invested by WHA Group from Thailand is expected to be started by the end of this month, instead of the late October in the initial plan, thanks to preferential policies as well as great support from provincial authorities.

Covering a total estimated area of 3,200 hectares, the $1-billion project’s construction will take place in seven stages with 500 hectares each.

“Local authorities committed to provide favourable conditions to the investor during the construction process so that the IP can welcome its first projects in early 2018,” Le Ngoc Hoa, Deputy Chairman of the Nghe An Provincial People’s Committee.

“WHA Group is one of more than 60 Thai firms that visited Nghe An in August to seek investment opportunities. According to the initial plan, the investor was to kick off the construction at the end of October, however, the province has been supporting them to complete the necessary procedures to start even sooner, as soon as by the end of this month,” Hoa added.

Hermaraj IP is one of the outstanding examples of projects where construction was pushed forward thanks to the provincial authorities’ support. Earlier in September 2015, a joint venture between Sembcorp from Singapore and Becamex IDC held the ground-breaking ceremony of Vietnam-Singapore Industrial Park (VSIP), covering an area of 750 hectares.

To date, the investor has completed the construction of synchronous infrastructure for 1A phase with an area of 100ha.

“Over 90 investors from numerous countries and territories have visited the VSIP to explore investment opportunities and a dozen of them committed to pour about VND400 billion ($17.6 million) into the park. As of early September, some firms received land and started the construction of their own plants in the park,” said Nguyen Chi Toan, a VSIP representative.

In order to prove the above commitment, Hoa mentioned Australian company Mavin’s project. Notably, Mavin had plans to organise the inauguration ceremony for Mavin Austfeed Nghe An livestock feed factory in February 2017.

The preparation time for the event coincided with the Lunar New Year holiday, however, on the fourth day of the Lunar New Year, representatives of the provincial authorities arranged time to solve the investor’s remaining problems so that the inauguration ceremony could be held on time.

David John Whitehead, chairman of Mavin, said that the group built factories in seven provinces and has warehouses in 19 cities and provinces across the country. However, Nghe An is the only province which now has four projects with the total investment capital of around $80 million, showing Mavin’s satisfaction with the province’s policies to lure in investment capital.

“Investing in Nghe An is a good choice for investors because the province does not only have an ideal geological location, but it also has synchronised infrastructure system, good human resources, and good policies for investors,” Whitehead added.

Furthermore, Hoa added that foreign investors, who want to complete procedures to be granted investment certificates just need to work with the Nghe An Centre for Investment Promotion and Development Consultancy through one-stop policy.
 
EVFTA signing expected in mid-2018 - Bernd Lange

European Parliament Committee on International Trade (INTA) chair Bernd Lange has said that much remains to be done in the next eight to nine months before the EU and Vietnam can sign a comprehensive free trade agreement on which official negotiations were closed in late 2015.

Speaking with the media in Hanoi last Friday, Lange said the EU-Vietnam Free Trade Agreement (EVFTA) could be signed in mid-2018 if the remaining issues are all solved.

The European Commission will send relevant documents to the European Parliament for review and ensure that the commitments in EVFTA are specific because they are the basis for members of the parliament to decide to whether adopt EVFTA or not.

According to Lange, Vietnam will have to solve three main issues before the signing of EVFTA. First, Vietnam has not ratified three of eight conventions of the International Labor Organization which ensure a healthy work environment and benefits for workers.

Second, Vietnam will have to link environmental protection with economic development. And finally, it should allow social organizations, non-governmental organizations and consulting teams to assist the Government in the process of implementing EVFTA.

Lange said these are international practices and regulations that have been widely accepted to ensure equal trade internationally and that the European Parliament will refer to these principles to make decisions.

At a meeting with Lange on September 14, Prime Minister Nguyen Xuan Phuc said Vietnam attached importance to cooperation with the EU. The signing of EVFTA will be a remarkable milestone and bring bilateral relations to a higher plane, he noted.

Phuc asked for continued support from INTA and Lange to facilitate the signing and ratification of EVFTA.
Phuc said Vietnamese ministries and negotiators would closely work with the EU and give top priority to completing procedures for the signing of the agreement.

The Minister of Trade and Industry and the EU trade commissioner signed a declaration on the official closure of negotiations on EVFTA on December 12, 2015, after three years of talks with 14 official sessions and many others at ministerial, delegation and technical-group levels.

The main contents include product based trade, origin rules, ports and facilitation for trade, food safety and hygiene methods and sanitation performance standard, technical barriers in trade, service trade, investment, trade protection, competition, government businesses, government purchases, intellectual property, sustainable development, cooperation and capacity building.

Right after the pact comes into effect, the EU will exempt Vietnam’s exports from about 85.6% of all tax lines, about 70.3% tax turnover. After seven years of implementation, the EU will eliminate 99.2% of import tax.

For textile, footwear and fishery (except canned tuna and fish balls) from Vietnam, the EU will erase all import taxes in seven years after the pact goes into force.

The EU will give Vietnam a significant tax quota for milled, unmilled and fragrance rice. The imported rice with this tax quota will not be taxed. With products made from rice, the EU will bring the import tax to 0% after seven years.

For honey, the EU will remove tax right after the agreement takes effect and no quota will be applied. All fresh greens, processed vegetables, fruits, bags, plastic products, ceramics and glass products, most taxes will be exempted as soon as the pact comes into force.

For EU exports, Vietnam will reduce import tax on cars and motorbikes to 0% after nine or 10 years but only motorbikes with cylinder capacity of more than 150cc will have a tax exempt route of seven years. Vietnam agreed to exempt import tax on wine, alcohol, beer, pork and chicken after 10 years.

On export taxes, Vietnam agreed to erase most export taxes for certain routes and keep certain tax brackets for important products, including oil and coal.

Regarding trade service and investment, Vietnam and the EU agreed to create an open investment environment, and trade activities of businesses from both sides convenient.

The areas where Vietnam will open for EU investors include specialist areas, financial services, communication services, transportation services, distribution services.

Dong Nai property market poses high risk

Dong Nai Province's real estate market holds potentially high risks despite the rapid growth being helped by improved traffic connectivity with HCMC, heard a seminar on the provincial property market on September 14.

Among HCMC’s neighboring provinces, Dong Nai has the better advantage as it is home to many important traffic intersections, with many axis routes cutting through it such as National Highway 1A, North-South Railway, HCMC – Long Thanh – Dau Giay, Ben Luc – Long Thanh and Dau Giay – Phan Thiet expressways, Phuoc Khanh Bridge connecting Can Gio to Nhon Trach, and Ben Thanh – Suoi Tien Metro Line which will link to Bien Hoa City.

Especially, Long Thanh International Airport project has made Dong Nai’s real estate market more attractive to HCMC investors as people tend to move to neighboring areas of HCMC.

At the seminar “Dong Nai real estate market: opportunities and risks” held by Dau Tu newspaper, it was announced that the province is home to nearly 300 property projects of domestic and foreign enterprises including those with investments of billions of U.S. dollars.

According to statistics of the market researcher Savills, Dong Nai as of 2016 had 55 housing projects supplying 30,200 apartments and land lots. However, the secondary market accounted for up to 90% with 27,600 products while the primary market provided only 2,600 products.

In general, investors focus on the land segment with long-term investment targets of five to seven years. Land prices remain low with VND4-4.5 million per square meter in Long Thanh and Nhon Trach districts and VND3.5 milion in Trang Bom and Giang Dien districts.

The market has shown signs of uncontrolled development as many local people have divided their farm land into lots to sell. Many areas of farmland of 3,000-4,000 square meters each had already been divided into smaller ones many years ago, said Nguyen Minh Khang, acting general director of LDG Group.

Due to this rampant development, numerous projects in the province without technical and social infrastructure facilities remain unsold.

Nguyen Thanh Lam, deputy director of Dong Nai Department of Construction cum chairman of the Dong Nai Real Estate Association, said the provincial housing market becomes active thanks to infrastructure development projects, especially Long Thanh International Airport project.

Industrial park and urban area development projects measuring up to 21,000 hectares around the airport have been suspended pending adjustment of zoning plans. The province has also halted the certification of farmland being split into small lots.

Lam categorized real estate projects in Dong Nai into three groups. The first group comprises of land resources in urban areas in Bien Hoa City, Long Thanh, Trang Bom and Long Khanh districts, which have been almost exhausted.

In the second group, projects with an area of 200-300 hectares each are located in localities with poor infrastructure, mainly land plots. These projects are only suitable for investors with medium-term investment targets from five to seven years.

The third group includes projects in areas without essential infrastructure facilities, and are only suitable for investors with over-10-year investment targets, he said.

Hau Giang calls for investment in seven key projects

The Mekong Delta province of Hau Giang is calling for nearly 300 million USD of investment in seven key projects, provincial officials said.

The province announced at a press conference on September 19 that it will hold an investment promotion conference in late September to announce priority projects and local incentives.

Director of the provincial Department of Information and Communication Pham Van Tuu said the projects include a rice processing for export project accompanied by a rice farming area, a ecotourism site at the Lung Ngoc Hoang nature reserve, and infrastructure construction for several industrial parks and a high-tech agricultural zone.

Hau Giang plans to offer exemption and reduction of corporate income tax for between 2-4 years and a 50 percent reduction for the next 4-9 years, with the preferential tax rates ranging from 10-17 percent.

In the framework of the investment promotion conference there will be such activities as a fair and exhibitions, and seminars on the local potential for investment and development.

Currently, there are 4,200 enterprises with a total registered capital of 45 trillion VND (2 billion USD) in Hau Giang. The province has so far attracted 40 foreign and domestic investors, who have poured capital worth 760 million USD and 66.4 trillion VND, respectively, in the local industrial zones and complexes.

VNA/VNS/VOV/SGT/SGGP/TT/TN/Dantri/VNEVET

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