BUSINESS IN BRIEF 5/8

More firms approved to use fast track customs service

The General Department of Customs will give Authorised Economic Operator (AOE) recognition to eight more businesses by the end of this year.

This follows an online discussion organised by the Hai Quan (Customs) online newspaper on Tuesday.

Currently, there are 14 AOE recognised companies that receive preference during customs procedures, which cuts costs and clearance times for goods.

According to Nguyen Duong Thai, deputy general head of the General Department of Customs, the agency will sign an agreement on AEO companies with other countries in the near future.-

HCM City’s high growth sustained

Ho Chi Minh City has been focusing on stabilising prices and ensuring adequate supply of goods this year in the first seven months of this year.

Chairman of the Municipal People's Committee Le Hoang Quan said official agencies have been monitoring changes in prices, exports, and fluctuations in the global market to help businesses cope with the economic downturn and maintain their exports.

They have also helped businesses by eliminating barriers to export and through market stimulus programmes, he said, adding that the city has managed to sustain its high growth rates this year despite difficulties.

The trading and service sectors saw lower growth rates, manufacturing growth was higher, and agricultural growth was stable, Quan said.

The report said work on major infrastructure projects has been accelerated, especially those set to be finished this year - like the Sai Gon Bridge No 2, Tan Son Nhat - Binh Loi Beltway, steel flyovers at major intersections, Thanh Da Bridge, Do Bridge, and flood-control projects.

In the first seven months of the year retail sales and services were worth 337.8 trillion VND (15.9 billion USD), a year-on-year increase of 11.8 percent, and exports topped 15.78 billion USD, unchanged year-on-year.

The city welcomed over 2.15 million foreign visitors, up 5.5 percent, while revenues from tourism rose by 15 percent.

Industrial production was up 5.3 percent while agriculture - forestry - fishery grew by 6.6 percent.-

5.5% GDP target within reach?

Although the economic recession is finally beginning to bottom out, Vietnam may find its 5.5% GDP target a hard nut to crack.

The National Financial Supervisory Commission believes Vietnam’s macroeconomic stabilisation efforts are paying off, minimising inflation and restoring foreign investors’ trust in the government’s performance.

The commission quoted a General Statistics Office report saying July’s consumer price index (CPI) edged up 0.27% from the previous month and 7.29% against July 2012. The cumulative 2.68% since the start of 2013 is a record low compared to the inflationary heights of previous years.

The commission concluded CPI trends indicate existing monetary policy and current domestic consumer purchasing power had only minor effects on inflation.

It attributed the rise in overall inflation to petrol price pressure and exchange rate adjustments redounding to transportation and import costs.

Vietnam aims to keep annual inflation at a level equivalent to or lower than last year’s 6.81%, meaning monthly CPI must not exceed a 0.76% average over the remainder of 2013.

Taking into account both domestic and global market fluctuations, the commission forecast Vietnam’s inflation target is certainly achievable.

Newly-established business numbers and the proportion of suspended businesses slowly resuming monthly operations are sources of cautious optimism.

Ministry of Planning and Investment statistics showed that despite an aberrant 4% fall in April 2013, the number of newly-licensed businesses rose 4.8% in May, 7.6% in June, and 8.4% in July.

Approximately 10,000 businesses forced into cessation by economic difficulties have resumed operations during the past seven months.

Industrial production is sustaining its upward trend, with its seven-month index (IIP) rising 5.2% compared to the 4.8% a year earlier.

The processing and manufacturing sector grew by 5.8%, a notable improvement on 2012’s 4.3%.

The inventory index fell significantly to 8.8% from a height of 21.5% in early 2013.

Vietnam’s half-yearly GDP growth rate of 4.9% is essentially equivalent to last year’s six month mark (4.93%), underwhelming hopes and tightening the screws for governments, ministries, and localities striving towards the 5.5% growth rate target.

The National Financial Supervisory Commission said low domestic demand is limiting growth and forcing exports to bear the majority of the national economic load.

In an August 1 report, HSBC said June’s export order reductions have pushed Vietnam’s purchasing managers’ index (PMI) below the 50.0 contraction threshold for the second consecutive month. The national economy’s recovery now clearly depends on stimulating domestic demand.

The commission attributed current low aggregate demand to the slashing of social investment—equal to only 29.6% of GDP in the first half of 2013 compared to the 34.5% a year earlier.

It advised boosting social investment by a significant 12–14 % from 2012’s levels.

The commission still considers macroeconomic stabilisation Vietnam’s primary task. The delivery of support packages should be completed as quickly as possible to assist struggling businesses.

It believes adroitly managing inflation and the macroeconomy will create useful space for any necessary adjustments to exchange rates and the market-based prices of electricity, coal, and public services.

The commission suggested that any adjustments under consideration should be clearly outlined in government roadmaps to avoid unwelcome market shocks.

Crunch time for manufacturers in July

Vietnam’s manufacturing sector continued to contract in July, slowing its slide as production and new orders began levelling out. Employment finished the month unchanged.

The latest HSBC survey registers Vietnam’s purchasing managers’ index (PMI) at 48.5 in July, an improvement on June’s 46.4 but its third successive month below the 50.0 contraction threshold.

The month’s modest falls in output and new orders are said to reflect underlying market conditions impacted by a decline in clients’ purchasing power.

Data indicated the net new order decline was partly due to falls in international interest. New export orders slipped for a second month in a row, and worryingly, at the fastest rate since the start of 2013.

The decline in new demand has helped companies catch up on backorders, completing existing contracts.

But it also fuelled the sharpest surge in unsold stock since June 2012. Inventories have now grown for two months in a row.

Despite the two months of contraction, Vietnamese manufacturers left staffing levels unchanged. The larger payrolls some employed to bolster production were balanced by others who deemed staff cuts necessary.

Output prices as measured in tariff averages fell for the fourth month in succession. The discounting reflects intensifying market competition and attempts to stimulate sales. Some plants appear to have reduced prices in hopes of liquidating inventory excesses.

In contrast, costs continued to rise. Limited input material supplies have resulted in seven straight months of Inflation. There is also evidence the stronger US dollar has raised import costs.

HSBC Asia Economist Trinh Nguyen said the continuing slackening of Vietnamese manufacturing activity reflects weakness both domestically and abroad.

Mountain residents cut off from standard electricity services

Hundreds of households in a mountainous village in Thanh Hoa Province are compelled to turn off their electrical appliances due to irrationally high electricity prices.

Many residents in Mau Lam Commune of Nhu Thanh District, said they have to pay an average of VND2,200 (USD0.1) per kWh of electricity even though the Ministry of Industry and Trade’s Circular 17 stipulates an average  price of only VND1,204 (USD0.05) per kWh for power consumption of 100 kWh per month or less.

Some that have household businesses have to pay VND3,200 (USD0.15) per kWh.

Due to the high power prices, many families that have modest incomes have been compelled to turn off their home appliances, including televisions, fridges, electric cookers and even electric fans during the summer to keep expenses within their budgets.

Vu Duy Khuong, a local man said, “Despite efforts to save electricity, our electricity expenses still reach over VND200,000 (USD9.43) per month, which is a lot for us. We have had no other choice but stop using all our electrical appliances over the past few months."

According to Khuong, local households had to contribute VND860,000 (USD40.58) each to raise funds to set up the electricity transmission line to the commune.

From 1997 to 2004, households in the commune contributed a combined VND1.2 billion (USD56,630) to do so.

Thanh Lam Electricity Service Co-operative was founded with Nguyen Ngoc Chuc as chairman. The agency has since set electricity prices for local residents without any official electricity bills.

Many local residents complained that apart from inflated electricity prices, the agency often imposes fines on any households that have several electric home appliances but modest electricity consumption, claiming they are “stealing" electricity. They then cut off the power supply for such households until they pay a fine of VND1 million (USD47.19).

In late 2012, residents in four hamlets in the commune suffered from power outages for several days due to the transformer station breakdown. Instead of taking timely action, the agency forced local households to pay VND15,000 (USD0.7) each for the repair.

While the electricity power transmission line has been aging, the agency has made no move to upgrade it, causing serious power leakages.

Nguyen Ngoc Chuc explained, “Due to wear and tear on the electricity power line, the local power leakage rate is rather high, reaching up to 42% in some places, forcing us to increase power prices.”

He added that they have fined local households VND5 million (USD236) in total since the beginning of this year but he failed to clarify how the funding has been used.

Thanh Lam Electricity Service Co-operative has yet to get an operation license or signed any trading contract with the electricity industry since 2010 but has nevertheless continued their operations.

Le Huu Hoa, Chairman of the communal People’s Committee said they have asked the electricity industry to take over their power transmission line in order to conduct standard management and service since 2008 but only one out of four power transformer stations have been handed over to them.

“This is a big problem not only in Mau Lam Commune but in 13 other communes in Nhu Thanh District as the electricity industry has yet to take over our rural power transmission lines for upgrade and better management,” Nguyen Hoang Ngoc, chairman of the district People’s Committee said.

Stranded Vinashinlines sailors continue seeking help

Still stuck in China with no way home, nine sailors from Vinashin Ocean Shipping Company Ltd. (Vinashinlines) managed to contact Dan Tri/DTiNews to report about their difficult living conditions.

Chu Trong Cuong, crew member of the ship Sea Eagle, said they have petitioned authorities for help many times, but have not yet received any clear answers about their future. After a relative of one of the sailors came to the company for help, a staff member phoned the crew to refer them to the Crew Centre if they needed any help, but added that it would be difficult for them to collect their salaries if they want to return home now.

Another crew member, Le Van Thoan, said, “The way the company is dealing with this situation doesn't make any sense. We have signed labour contracts with the company. How are we expected to live if we are not paid our salaries when we return?"

Thoan added that the company still owed 18-months of salary. Most of sailors’ families are in difficult financial conditions and are counting on the unpaid salaries.

Living in very harsh condition on the ship, some sailors accepted to return home without salary, however, they faced complicated visa and passport procedures.

It appears from a video taken by the sailors and sent to DTiNews that they are living with serious shortages of food, electricity and medicines. Most also suffer from skin and digestive problems. The ship is provided with electricity for only five hours a day and the water is so polluted with metals and rust that the sailors have resorted to filtering it by hand.

The supplies sent by the company are often late, forcing the men to eat food that is past expiration.This situation has lasted for the past two years, and some of the remaining sailors are beginning to show signs of deep depression.

Mr. Cuong said, “We know that Vinashinlines is facing difficulties, but we can’t bear this situation anymore. We hope that the government and agencies, especially the Minister of Transport, Dinh La Thang, would make an effort to create better conditions needed for Vinashinlines to sell off the ships which are not in operation to maintain  those ships which are."

Another ship, the Sea Eagle, also owned by Vinashinlines, has also been docked in China since 2008, along with nine sailors. The ship has not received maintenance since March of 2011.

The Lotus has been in the same situation, stuck in China, since 2009. Crew members of both ships have asked Vinashinlines to send replacements for them so they can return to their families.

Food safety key to EU market

General Secretary of Ha Noi's Biology Association Nguyen Van Bieu has called on those exporting vegetables to ramp up their compliance with food safety standards and the Good Agriculture Practice (GAP), to meet the requirements of EU consumers.

Speaking at a workshop yesterday on the export of fruits and vegetable to the EU, Bieu said that the EU had tightened regulations on quality, posing a challenge to Vietnamese producers.

In early 2012, five types of produce, including basil, sweet pepper, celery, bitter gourd and coriander failed to meet the EU food hygiene and safety regulations. The EU subsequently announced they would halt the import of Vietnamese produce if five more batches of exports were found to be violating regulations.

In an effort to prevent a complete ban on Vietnamese vegetable and fruits, the Ministry of Agriculture and Rural Development temporarily suspended issuing quarantine certificates in March 2012 to prevent other fruit being added to the EU's blacklist.

Bieu noted that as of June 30 2013, local exporters could resume shipment of Vietnamese produce to the EU because the department had begun granting quarantine certificates.

To regain the confidence of EU consumers, Vietnamese processors and exporters needed to improve quality and environmental management systems, Bieu said.

He also urged Vietnamese enterprises to study changes in EU food safety standards so that they could tailor their processing work accordingly.

Nguyen Thi Tan Loc, from the Fruits and Vegetable Research Institute, said that organic products grown in a sustainable way and labelled as fair trade could enter EU market easily.

Viet Nam currently suffers from a shortage of arable farm land and few producers are applying Good Agriculture Practice standards, she said, adding that a shortage of market information was a disadvantage for Vietnamese enterprises.

Between 2005 and 2011, Viet Nam's fruit and vegetable exports averaged US$300 million per year. In 2011, it reached a record $630 million, 35.5 per cent higher than figures recorded in 2010 and placing it in the top five largest vegetable exporters in the world.

In 2012, Viet Nam earned a total $829 million from exporting fruits and vegetable, with a target to increase this to $1 billion this year.

The EU is the largest importer of Viet Nam, spending $20.31 billion on importing its products including footwear, textile in 2012.

Enterprises in difficulty despite intervention

High stocks of goods and non-performing bad debts remained the main concerns of enterprises, a conference was told here on Tuesday.

The gathering was also told Government support policies were not as effective as expected.

Experts said policies such as the bad-debt resolution project or the property market support package, were inconsistent, complicated and slow to reach the targeted subjects.

Nguyen Minh Phung, deputy director of the Ministry of Finance's Tax Policy Department, said tax incentives, such as tax exemption and deferrals, did not satisfy all enterprises.

Many enterprises, especially those large in scale, did not benefit much from the policies.

According to Hoang Van Quyet, director of the Viet Nam Financial Investment and Construction Joint Stock Company, administrative procedures should be simplified to facilitate enterprises' operation.

Experts at the conference urged Viet Nam to enhance restructuring by focusing on the agricultural sector, pointing out that agriculture was the core of the economy, ensuring food security for the country and contributing to exports.

Despite this, farmers encountered with many difficulties.

Quyet said that Viet Nam had huge potential as an agricultural economy but failed to bring it into play, adding that the Government's policies should target restructuring the agricultural sector with the application of high technology for sustainable development.

The experts also said that restructuring of State-owned enterprises (SOEs) needed to be sped up, adding that the efficient use of society's resources must be enhanced to create breakthroughs.

According to economist Nguyen Minh Phong, increasing public investment was necessary to stimulate growth. However, this might only be a good choice in the short term.

He said public investment should be used efficiently to create opportunities for development of the private sector.

Another adviser, Le Dang Doanh, said that purchasing power was at its lowest level in 13 years. He said that interest rate cuts recently reflected efforts by the State Bank of Viet Nam to overcome this.

The conference was organised by Dien Dan Doanh Nghiep (Enterprise Forum) newspaper.

HCM City faces shortage of building inspectors

The lack of inspectors with expertise and competence at the grassroots level causes many difficulties for building inspections in HCMC, said representatives from the city’s district governments.

Speaking at a meeting on the draft regulation on coordination between the Department of Construction and the district-level authorities in building inspections on Monday, several district governments complained they did not have enough qualified inspectors. The reason given is that inspectors with the expertise and capacity have been transferred to the municipal construction department.

In addition, ward-level inspectors cannot handle violations in construction, but they have to report to the construction department when a violation is detected, leading to delays in the process.

A representative of Thu Duc District proposed the construction department share part of its building inspectors for the district authorities.

Speaking at the meeting, HCMC Vice Chairman Nguyen Huu Tin asked the construction department to consider the proposals of the district authorities and amend the draft regulation.

Still, he stated what mattered was not the number of inspectors, but the way to approach and handle the problem.

Recently, dozens of homes built without a license in Binh Chanh District have been dismantled. Statistics show that there had been 681 cases of unauthorized construction in Binh Chanh District as of July 1.

Unauthorized construction is a complicated issue in HCMC, especially in Binh Chanh District. This situation is a result of migration and lax management of the authorities, said a statement of the HCMC government released on July 4.

Gold selling schedule still unknown

After selling out an extra one ton of gold on Tuesday, the State Bank of Vietnam (SBV) says it will continue to sell gold via auctions and will gradually decrease the biddings until local demand cools but it isn’t sure when the selling will stop.

The SBV has sold out a total of roughly 50 tons of gold in the past four months, equivalent to a staggering US$2.5 billion or up to some VND50 trillion.

The SBV said it would continue gold auctions to provide gold to the market as local appetite for the precious metal remains strong. A leader of SBV said that was the only way to bring down local demand. To obtain the target of stabilizing the exchange rate, it is a must to control the gold market, he said.

There have been roughly 11 tons of gold launched onto the market this month after the closure of gold trading positions was reportedly over from June 30, with around one ton on offer at every gold auction successfully finding buyers.

In such a context, many people express the same concern that the central bank will have to resort to foreign reserves to import gold to continue gold selling while gold prices will shoot up again if the authority terminates gold auctions.

According to an expert in the banking industry, it is hard for the SBV to stabilize gold prices if it seeks to do so by selling. But it is also impossible to consider the action as a solution to stabilize the gold market, he argued.

The expert ascribed his viewpoint to the fact that a fall in gold demand is unimaginable in the context that investors still see the precious metal as a lucrative investment channel given recent interest rate cuts and the troubled stock market.

It is probable that high inflation would return as forecast by many international financial institutions, meaning gold purchase by locals will barely come to an end, he said.

Gold demand will be still out there regardless of hundreds of tons of gold sold out, he insisted, adding it would need up to US$5 billion for gold imports, equal to the amount of this year’s balance of payments.

As the SBV has deeply intervened into the market with poor knowledge of its operation, the authority is still unable to manage the market properly. Now is the right time for the central bank to review the regulations of Decree 24 to make revisions accordingly to narrow down the gap between global and local gold prices, he proposed.

The SBV also needs to seek ways to make it easier for locals to make gold trading, he said. That is because gold demand has shown no signs of decline in the last year despite a restriction in the number of gold selling points, he reasoned.

What should be addressed now is the heavy reliance of gold prices on the country’s economic policies and global market movements, the expert pointed out. He suggested collecting taxes from gold purchase and offering tax exemption for gold selling to discourage local demand now.

FamilyMart store reopens at Sky Garden building

The FamilyMart convenience store located at Sky Garden building in HCMC’s District 1 reopened on Tuesday after a period of interruption that followed a restructuring of stakes in the former operator of the store chain.

Kigure Takehiro, chairman of Vietnam Family Convenience Stores Co. as owner of the FamilyMart chain in Vietnam, told the Daily that this was the first outlet to open, heralding the Japanese retailer’s comeback to the local retail market after parting company with its local partner Phu Thai Group Joint Stock Company.

The FamilyMart store at Sky Garden building, 20 Le Thanh Ton Street, District 1 stocks processed food and technology products, most of them imported from Japan to meet the demand of nearby residents, especially Japanese. The store is worth US$120,000, equivalent to VND2.5 billion.

Takehiro said that with the resumption of the store’s operation, FamilyMart wanted to affirm its long-term business commitment to Vietnam after the cooperation with Phu Thai ended.

In addition to the store at Sky Garden, Vietnam Family Convenience Stores will open another store at 188E Phan Van Tri Street in Binh Thanh District this Saturday.

In May, FamilyMart Japan sold its 49% stake in the joint venture to Phu Thai after four years of cooperation. With this deal, 42 FamilyMart stores are under the ownership of Phu Thai, with 41 stores renamed as B’s mart.

Work to resume on Co Chien Bridge project

The cable-stayed Co Chien Bridge project will resume construction on Friday after about two years of delay, according to the Ministry of Transport.

Work started on the project on March 7, 2011 with two components at a total cost of nearly VND3.8 trillion.

The first component was assumed by BOT Rach Mieu Company, including a 1.6-kilometer bridge of four traffic lanes allowing for a designed vehicular velocity of 80 kilometers an hour. The bridge with a width of 16 meters has a clearance height of 25 meters for ships to navigate under.

This component costing some VND2.21 trillion is to be developed under the build-operate-transfer (BOT) format.

The second component, meanwhile, is constructed by the project management authority No.7 with the transport ministry active as the project owner. It consists of approach roads from both sides of Ben Tre and Tra Vinh provinces, as well as small bridges on the approach roads, all stretching over 14 kilometers.

The scheme has total investment of more than VND1.58 trillion which will be sourced from the State budget.

With the construction resumption, the first component, still under the BOT format, will have capital sourced from the State budget. Its investment capital is set at some VND1.26 trillion, and construction is now conducted by a consortium of Civil Engineering Construction Corporation No. 1 (Cienco 1), Tuan Loc Construction Investment Joint Stock Company and 577 Investment Joint Stock Company.

Co Chien Bridge when in place will link National Highway 60 running from Tien Giang to Tra Vinh and will help shorten the distance from HCMC to Tra Vinh to about 70 kilometers.

Toll fee collection for the project’s investment recovery will start from January 1, 2016 for a period of 20 years.

HK firms shift to Vietnam

Hong Kong’s enterprises are making careful preparations for investments in Vietnam to cash in on opportunities from the Trans-Pacific Partnership (TPP) agreement that the country expects to conclude this year.

Pacific and Crystal Group’s subsidiary Crystal Garment as two big garment enterprises of Hong Kong are preparing for expanding production of apparel products in the northern province of Hai Duong after receiving investment certificates.

Problems in site clearance for the two projects do not discourage the two investors whose pledged investment is worth some US$538 million combined. Both enterprises have continued to negotiate with Hai Duong Province authorities and the Ministry of Planning and Investment over a proposal to spend around VND600 billion to take over Lai Vu Industrial Park for their production bases.

Efforts of these enterprises, in the view of experts, are preparations for them to easily enter the U.S. market once the TPP is concluded among 11 countries including Vietnam and the U.S.

The Vietnam Trade and Industry Information Center under the Ministry of Industry and Trade noted that with production plants in Vietnam and using local materials, Chinese enterprises can penetrate the U.S. market with export tax rates much lower than operating from China.

TPP negotiations between Vietnam and the U.S. are progressing well. If the negotiations end late this year and Vietnam together with the U.S. and nine other countries become members of TPP, goods originated in Vietnam will enjoy tax rates cut by half or even reduced to 0% compared to the current rate of 17% the U.S. is imposing on Vietnam’s garment products.

Therefore, enterprises with plants in Vietnam will be more advantageous than those in China which have to pay a tax rate of up to 37% when shipping apparel products to the U.S.

Farm produce shipments returned

Nothing hurts agricultural producers more than losing the trust of consumers.

Vietnam’s farm produce exports sharply declined in the first half of this year. The industry cannot blame this on market fluctuations. A spate of returns prompted by food and hygiene safety failures is a warning against producers who are gambling on lax standards.

Agricultural exports in the first half of 2013 were estimated at US$9.7 billion, down US$610 million from a year earlier. Key commodities like rice, tea, fruits, and seafood dropped in both volume and price.

European partners returned tea products imported from Vietnam after detecting the level of pesticide residue was higher than permitted. The US also halted Vietnamese dragon fruit imports, due to unacceptable pesticide residue.

Rice is no exception. The Vietnam Food Association says that more than 500 containers of Vietnamese fragrant rice have been returned since the beginning of 2013 after failing to meet quality standards. Some businesses were caught attempting to adulterate jasmine rice with the similar-looking but lower quality OM 4900 rice.

There is no denying that some unscrupulous exporters tried inflating shrimp catches via injections of impurities, tarnishing the reputation of the Vietnamese shrimp industry as a whole.

Agro-forestry and fishery management authorities must quickly take strong action against such malpractice.

Vietnam has made great strides to become one of the world’s leading exporters of rice, tea, coffee, and seafood. Careless mass production and slack quality monitoring, to be sure, only flush all its efforts down the toilet.

Vietnam is one of the three countries facing the return of agricultural produce shipments.

In major markets requiring strict food hygiene and safety, such as the EU, Japan and the US, Vietnam suffers a loss of some US$14 million in profit caused by the returned shipments each year.

As a matter of urgency, Vietnam should intensify supervision work and punish those involved in malpractices which are harmful to human health and the environment.

Farmers and exporters, for their part, should have a higher sense of responsibility for meeting food hygiene and safety standards at any cost.

Mobile banking services flourish in Vietnam

Along with the increasing number of smartphone users, several banks have developed services to support financial transactions via mobile phones.

A survey on internet usage in Southeast Asia by Nielsen in 2011 showed that two out of every five Vietnamese use smartphones to access internet. At the time of the report online banking service for mobile phones were still new and simple. But with the increased access to broadband networks, WiFi services and a huge smartphone and tablet market, consumers are getting online more often. As a result, banking services for mobile phones have increased dramatically.

Such services facilitate consumer banking by taking away the necessity to travel to a bank branch, ATM machine or even a computer. They have also made it easier for smartphone users to pay bills and transfer money.

Since 2011, many banks have started to develop their own smartphone apps to promote their mobile banking services.

Talking with Nhandan Newspaper, Hoang Son, Director of Viettel Telecom Company, said they are providing a service called Bankplus to many major banks including LienVietPostBank, BIDV, Vietinbank, Vietcombank and Military Bank.

Le Thanh Tam,  CEO of IDG - ASEAN, an international data group said, "Banks won't have to establish as many branches and at some point, the number of branches may even decrease."

This is also part of a broader programme to eventually foster more cashless payment systems in Vietnam, which has been approved by the Prime Minister.

Furniture makers suggested shifting to interior products

The central province of Binh Dinh is asking local companies to shift to interior wooden furnishing products as exports of outdoor items are meeting many difficulties.

Nguyen An Diem, chairman of the Forest Products Association of Binh Dinh, said the provincial government now is urging wood processors to switch from outdoor products to interior wooden items and improve materials and designs to create competitive items.

Binh Dinh has earned big export revenues from outdoor woodwork shipments to Europe over the years but the demand for such items has seen a sharp fall over the last two years, Diem said.

To support the troubled members in the industry, the provincial government has asked Bank for Investment and Development of Vietnam (BIDV) to provide credits to those changing production activities in line with the province’s suggestion.

Japan-Vietnam Initiatives have bettered business environment

The ten-year deployment of the Vietnam-Japan joint initiatives has helped better the local investment environment, said Takamura Kuniharu, co-chairman of the Vietnam-Japan Economic Committee.

The business environment in Vietnam has become more attractive to Japanese investors, proven by the fact that up to half of the foreign investment projects in Vietnam in the past decade are Japanese, he said at the signing ceremony for the fifth phase of the joint initiatives between the countries in Hanoi last Friday.

Asked how the four phases of implementing the Joint Initiatives have met Japan’s expectations, Kuniharu said: “Up to 80-90%.”

Japanese firms in recent years have always captured the top position in terms of investment capital in Vietnam, meaning that the joint initiatives have greatly contributed to improving the investment and business environment in the country, he remarked.

For Japanese companies making investment in Vietnam, the implementation of the plans and actions through the fours phases is evidence of how the local investment environment has improved, he said.

Regarding the fifth phase set for execution in the next 18 months, the Japanese official hopes efforts would be made to tackle the pending matters as well as address new issues pertaining to law and policy, infrastructure development, macroeconomic stabilization, taxes, customs and banking among others.

In this phase, both sides will need to make greater efforts to solve the tough problems step by step, he said, adding that a good result would be attained given the experiences achieved in the last decade. Executing the initiatives in the fifth phase will make more of a contribution to changing Vietnam’s investment environment for the better, he forecast.

Vietnam-Japan Joint Initiatives are really unique as such a program is only launched in Vietnam and has attracted a great deal of attention of related sides, Kuniharu told the Daily. He informed many other countries have a keen interest in this mechanism and want to deploy it and that Japan intends to carry out a similar scheme in Myanmar.

Meanwhile, Japanese ambassador to Vietnam Yasuaki Tanizaki announced that Japan has lately agreed to provide over US$1 billion in official development assistance (ODA) loans to Vietnam.

However, the Japanese ambassador expressed his concerns about the effective usage of ODA capital in Vietnam. As multiple projects have exposed efficiency much lower than expected by the Japanese side, he has to work regularly with related ministries and agencies, especially the Ministry of Planning and Investment, to seek solutions to the problems.

Homes for rent rival hotels

Owners of many serviced apartment buildings have drawn hotels into an intense competition when offering a daily rent format like hotel service.

Serviced apartments and hotels have been dealing with different groups of customers. While hotels serve those in need of accommodation for just one or a few days, serviced apartments are normally available for monthly rent.

However, many serviced apartment buildings will share the market with hotels as they are applying the daily rent format along with the monthly and yearly ones.

One of those apartment buildings with a daily rent scheme is Capri by Fraser, launched into the market this March.

Located in Phu My Hung town in HCMC’s District 7, this building provides 175 serviced apartments with a rent of VND1.6 million (US$75) for a one-night stay and VND25 million (US$1,200) for a month. The apartment rent includes breakfast just like hotels.

Charlie Feng, general manager of the Capri by Fraser project, said the building had been 30% full and was striving for 50% occupation rate by the end of this year.

In addition to a flexible payment policy, the building offers buses taking tenants to the downtown areas every day.

SSG Group has recently launched its Saigon Airport Plaza, located near Tan Son Nhat International Airport in HCMC. This project is a complex of apartments and offices for rent.

The project owner sets aside 84 serviced apartments for a monthly rent of VND25-29 million (US$1,200-1,400), or a daily rent of VND1.4 million (US$70).

There are currently around 4,390 serviced apartments in HCMC, which are competing fiercely with apartments leased by private individuals, says CBRE Vietnam.

Meanwhile, the hotel market has just passed the second quarter with an average occupation rate of 62%, down 13 percentage points over the preceding quarter. The average room rate was VND1.7 million per night, down 12% year-on-year.

There are some 90 hotels meeting three- to five-star standards in HCMC, supplying a total of 11,870 rooms. Two more five-star hotels with about 500 rooms are expected to join the market late this year.

Enterprises indifferent to trade remedies

Although the legal corridor for trade remedies has been available for ten years, local enterprises have paid little care to trade tools to protect themselves, with only four lawsuits having been filed against illicit practices from international rivals, heard a conference in Hanoi last Thursday.

Speaking at the conference on trade remedies held in Hanoi, Dinh Thi My Loan, chairwoman of the Trade Remedies Council, said that trade remedies consisted of anti-dumping, anti-subsidy and self-defense, with anti-subsidy being used the most globally.

In the past ten years, China is the country facing the highest number of anti-dumping cases, followed by Taiwan and Indonesia. Products frequently sued are base metal, chemicals, plastics, rubber, machines, electric equipment and textile-garment products.

Loan said that such products were among the top ten imports in Vietnam, but few actions have been taken on the part of local enterprises to protect themselves.

“Therefore, it is highly likely that neighboring enterprises are dumping such goods into Vietnam,” Loan said.

According to Le Sy Giang from the Vietnam Competition Authority, when enterprises are injured by fierce competition from imported goods, they need to use self-defense tools such as import taxes, technical barriers for industrial products and quarantine for agricultural products.

However, if the import of some certain products increases strongly and suddenly, trade defense will be the most affective measure for enterprises.

Nguyen Thu Trang, director of the Chamber of Commerce and Industry’s WTO Center, said that there were many ways to identify if goods are being dumped into Vietnam or if such products are receiving subsidies from their governments to compete unfairly, causing heavy damages for local enterprises.

“While trade defense as a local instrument of WTO is used widely worldwide, it is not in Vietnam to protect legitimate rights and interests of enterprises,” Trang said.

According to lawyer Nguyen Van Hai from Mayer Brown JSM, local enterprises do not want to sue foreign firms for dumping goods as they do not want to get involved in lawsuits in which they may gain nothing.

“Besides, as long as enterprises still expect supports from State agencies, increasing their awareness of trade remedies remain difficult,” Hai said.

According to Nguyen Thi Dung from Bluescope Steel, a firm with experiences in anti-dumping lawsuits, although the anti-dumping law has been adopted for over ten years, the issue is still new to Vietnamese enterprises.

Enterprises do not study such regulations until their rights are violated, and it is difficult for them to get access to relevant information and data of management agencies.

Dung said that enterprises need to be ready for anti-dumping lawsuits by studying information about ongoing lawsuits as well as carefully recording information in the case of suing or being sued.

Exporters expect high shrimp price in second half

Local shrimp processors predict shrimp prices on the global market will surge in the second half of this year due to undersupply, which will help them achieve better business results.

Le Van Quang, chairman of Minh Phu Seafood Corp., said that the declining supply of many exporting countries caused by diseases, natural disasters and the early mortality syndrome (EMS), plus the increasing demand of major countries such as the U.S., Japan and EU would help push up the shrimp price in the final months of the year.

Vietnam’s advantage is that it has almost controlled EMS on shrimps, and thus the shrimp harvest volume will increase in the coming time.

EMS has raged in many shrimp farming countries in Asia as the world’s biggest shrimp farming region.

Thailand, a country producing 500,000-600,000 tons of shrimps per year, incurs the heaviest loss. It has recently forecast that the shrimp volume will fall by up to 50% from 550,000 tons of last year, and will likely have to import shrimps from Vietnam.

In the January-June period, Minh Phu exported over 14,400 tons of shrimps with a value of US$175.3 million, equivalent to that of last year’s same period.

Meanwhile, Ngoc Tri Seafood Company targets to maintain the export shipments to South Korea, Japan, the Middle East and EU. The firm said that South Korea’s import demand has gradually recovered since May after a strong drop in previous months.

Ngoc Tri’s shrimp export in the six-month period was similar to that in the year-ago period with US$13 million.

Next month the U.S. will have a final decision on anti-subsidy tax imposed on frozen warm-water shrimps. Quang from Minh Phu said that Vietnam’s shrimp export would still be affected no matter what the decision was.

According to the initial decision issued in May, shrimp products of Minh Qui Co., a unit of Minh Phu Corp., are charged with a tax rate of 5.08%.

Vietnam’s shrimp export in the year’s first half went up by 8.6% to over US$1.1 billion, with an increase seen in shipments to major markets like Japan, the U.S., China and Canada.

Crackdown urged on low quality cashews

The Viet Nam Cashew Association (Vinacas) has urged enterprises that import raw cashews to check produce carefully, following concerns over sub-standard cashew imports from Africa.

Vinacas said it had recently received complaints from about 20 Vietnamese import enterprises about the low quality of raw cashews imported from Africa.

Africa was the main supplier of raw cashews for Viet Nam, supplying an average of 400,000 tonnes per year, accounting for 50 per cent of Viet Nam's total raw cashew import volume.

The director of Hoang Thanh Company in southern Long An Province, Nguyen Thi Tu, said the company imported 200 tonnes of raw cashew from Africa during 2011, but the nuts were of low quality.

She said the company was yet to receive a refund for the low-quality produce, adding that Vietnamese importers often have to pay advances worth 95-98 per cent of a contract's value.

According to Vinacas' president Nguyen Duc Thanh, Vietnamese importers should boycott suppliers of low-quality produce.

In a bid to solve the problem, at the beginning of 2013, Vinacas raised standards for raw cashew imports from Africa in contractual negotiations.

Vinacas has also urged Vietnamese cashew enterprises to ensure they do not overly rely on importing raw materials for production.

The supply of raw cashews was forecast to shrink as many African countries are increasingly processing their products before exporting it to increase added value.

If Vietnamese enterprises remain reliant on imports, they would be forced to accept raw cashew imports at high prices.

The association said that Vietnamese cashew enterprises also faced difficulties in accessing loans from banks, calling for added supports for the sector.

Viet Nam imported nearly 230,000 tonnes of raw cashews in the first seven months of this year, worth US$226 million. This represented an increase of 88.9 per cent and 94 per cent for volume and value, respectively, over the same period last year.

The country's cashew exports during the seven-month period rose by 15 per cent, reaching 136,000 tonnes, with turnover rising to $759 million, a surge of 5.9 per cent.

The plantation area for cashews in the country was about 50,000ha but only 30,000ha of which could be harvested.

Africa and South-east Asian countries were the main suppliers of raw cashews for Viet Nam.

Domestic businesses struggling on home turf

The successful operation of multinational corporations in Vietnam’s supply chain has caused difficulties for domestic businesses to build their own trademarks.

Vietnam High Quality Goods Enterprise Association President Vu Kim Hanh says many businesses are finding it difficult to promote their goods on the local market. Every month, the association organizes two rural tours for 50 businesses including Vinamilk and Kim Hang Aluminium & S. Steel Corporation to expand their distribution networks and promote their trademarks.

In recent times, the rural demand for consumer goods has declined since farmers in some provinces are unable to sell their products.

Another reason is that there is a fierce competition between multinational companies who wish to corner the consumer market by offering reduced price goods.

Hanh suggest domestic businesses should work with supermarket managers to gain a leg to stand on home turf.

It seems ASEAN’s international integration and trade liberalisation would rather invite more foreign partners. Thirty six business respondents in a survey of the Vietnam High Quality Goods Enterprise Association members confirmed their interest in seeking cooperation with innovative technology providers.

Kantar Worldpanel‘s May market research rankings revealed international brands already dominate healthcare, beauty and cosmetics, and beverages areas in Vietnam. Unilever’s trademark encompasses popular brands like P/S, Clear, and Lifebuoy. Other successful brands like Kimberly Clark’s Kotex and Palmolive’s Colgate are also foreign.

Unilever accounts for three fifths of home cleaning products like Omo washing powder, Sunlight dishwashing liquid, and Comfort fabric softener.

Vietnam only has My Hao’s washing powder and dishwashing liquid products listed at the bottom of the top five.

Sabeco’s beer brand 333 is placed third after international beverage powerhouses like Nestle’s Nescafe and Sting’s Pepsico. As a rare highlight, Vinamilk tops the list of food trademarks and is followed by Chinsu while Tuong An Vegetable Oil rounded out the top five consumer good brands.

Against this backdrop, businesses need co-ordinated efforts to ensure that consumers stick to the local trademarks in the long run.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR