BUSINESS IN BRIEF 10/2 Profit-taking hits share prices in HCM City The stock market last week witnessed profit-taking on the blue chips, as capital inflow into speculative stocks increased. On the HCM City Stock Exchange, the VN-Index closed the first trading week of the Year of the Horse 1.2 per cent lower to 549.76 points. However, the HNX-Index on the Ha Noi Stock Exchange rose slightly, by 0.8 per cent to 74.78 points. Last week, the market was open only on Thursday and Friday after the nine-day Tet (Lunar New Year) holiday. The trading volume on the southern bourse averaged 107.1 million, with the average trading value at VND1.944 trilion ($92.5 million). On Friday, liquidity topped VND2.37 trillion ($112.8 million) on the trading of 124 million shares, while the benchmark index lost 0.89 per cent. The profit-taking was strong on the blue chips last week, which included Masan Group (MSN), insurance company Bao Viet Group (BVH), real estate giant (VIC), Sacombank (STB) and Hoang Anh Gia Lai (HAG), causing losses and dragging down the VN-Index. The selling by foreign investors was a factor causing these stocks to fall. On Thursday, foreign investors boosted selling with a net value of VND96.4 billion ($4.6 million). Speculative stocks were the main supporters of the week, especially stocks in real estate, construction and transportation sectors, such as FLC Group (FLC), Dat Xanh Real Estate Company (DXG), Vitaco (VTO) and Fecon Minerals Company (FCM). Liquidity also improved on the northern bourse on Friday with more than 80 million shares traded with a total value reaching VND621billion ($29.5million), doubling Thursday's figures. After being net sellers on Thursday, foreign investors returned to become net buyers on Friday. Over the week, foreign investors sold a net value of VND45.2 billion ($2.5 million). HCM City-listed Kinh Do Group (KDC) was active last week, increasing 13.3 per cent, and Ha Noi – listed PetroVietnam Construction Joint Stock Company (PVX) rose by 20 per cent. According to Vietstock Finance, speculative stocks will remain attractive to investors in February. Profit-taking pressures on blue chips will also be a factor which will impact market transactions, together with expectations about soaring foreign capital inflows and the regulation about increasing foreign stakes at listed companies, to be issued soon, the company said. According to FPT Securities, the stock market of Viet Nam was expected to enter a positive trend in the coming period when the regulation about increasing room for foreign investors was passed. In the short term, the market might continue to fluctuate with gains and losses. Viet Nam Investment Securities said that selling pressure is expected to continue this week. Regulators encouraged to lure foreign investors Minister of Finance Dinh Tien Dung urged the market regulators on Thursday to take measures for attracting greater participation of foreign investors in Viet Nam's stock market. He said this at the opening of trading of the Ha Noi Stock Exchange and added that it would be in line with international commitments and integration process. Many experts have forecast that the capital inflow into the stock market would grow this year, accompanied by innovations in policies and improvements in the macro-economy. The regulation about giving more space to foreign investors in listed companies, which is expected to be issued soon, would especially be a stimulator for that. At the ceremony, Dung also said that the restructuring of the stock market must be hastened, including enhancing its quality, restructuring the securities companies and fund management companies, and improving the transaction system. In addition, the derivatives market must be implemented with the establishment of the Viet Nam Stock Exchange to ensure that the development of the stock market is in line with the general economic development. Dung stressed that the restructuring of State-owned enterprises must be sped up by boosting privatisation and disinvestment from non-core businesses. The transparency of companies after the initial public offering must be ensured. Dung also said that the management and supervision of the market must be tightened, while violations have to be handled strictly to ensure healthy operations of the market. Sugar export halt causes worry The Viet Nam Sugar and Sugarcane Association (VSSA) announced concern over sugar stocks following the Ministry of Industry and Trade's (MoIT's) order to temporarily cease refined extra (RE) sugar exports. In a document sent to northern Lao Cai Province from the Ministry of Agriculture and Rural Development and VSSA last month, MoIT will only allow the export of 200,000 tonnes of refined standard (RS) sugar through the province's Ban Vuoc border post by the end of this June. The export of RE sugar will be resumed after ensuring that domestic demand is met. However, the VSSA told the online VnEconomy newspaper that the sugar inventory at Vietnamese sugar factories was estimated at around 311,900 tonnes, while the inventory at the association's commercial companies was more than 13,400 tonnes. MoIT has allowed 10 businesses to export sugar, but the names of the companies and their export quotas have not been received, the VSSA's vice chairman Do Thanh Liem was quoted as saying. The sugar industry will have to pay storage costs for the food processing businesses if they are not allowed to export their RE sugar, and this could bring difficulties to the sugar companies, Liem said. He added that the ministry will also allow 77,000 tonnes of sugar to be imported – mainly RE sugar – by the end of June. This would make the RE sugar stocks even larger. Domestic sugar prices have dropped sharply to VND13,000 per kilo because of a slowdown in sugar exports before and after the Tet holiday, Nguyen Hai, the VSSA's General Secretary pointed out. RE sugar stocks are currently very high, and it has been forecast that the country's total sugar productivity this year will be 1.5-1.6 million tonnes (of which RE sugar would be around 600,000 tonnes) not including the current inventory, Hai noted. He said the ministry's requirement to limit the export of RE sugar would lower the product's price. Tet draws an extra 21% foreign tourists The number of foreign tourists taking tours in Viet Nam last month increased by 20.8 per cent compared to the same period last year, tourist companies report. Nguyen Van Tuan, general director of the Viet Nam National Administration of Tourism, said more than 722,300 foreign visitors arrived the country in the Lunar New Year month, an increase of 7.5 per cent compared to last December. The country attracted more than 7.5 million foreign visitors last year, an increase of 10.6 per cent compared to 2012. According to Tuan, the tourist industry is hoping to attract more than 8.3 million foreign visitors this year. This Tet, Khanh Hoa Province attracted 153,500 visitors, an increase of 20 per cent compared to last season, earning around VND290 billion (US$14 million) in turnover. "Travel agencies have launched several special tours at affordable prices to satisfy the increased travelling demands of both Vietnamese tourists and foreigners," Phan Thanh Truc, deputy director of the Khanh Hoa's Department of Culture, Sports and Tourism, said. According to the Department of Culture, Sports and Tourism of Kien Giang Province, more than 122,700 foreign visitors visited Kien Giang in 2013— mostly Russian, Japanese, Korean, Cambodian, and Chinese. In only the first four days of Tet, which began last week, Phu Quoc Island attracted 2,759 foreign visitors. In Da Nang, more than 10,000 foreign visitors from eight cruise ships flocked to local tourist sites during the Tet holiday, an increase of 34 per cent compared to the last season. The province also attracted 8,400 foreign visitors via airplane. In Da Lat, several thousand visitors flocked to famous tourist sites such as Xuan Huong Lake, Da Lat Market and Tinh Yeu Valley during the last week. Local hotels, lodges and restaurants were overloaded. Accommodation prices have gone up by 50 to 200 per cent. HCM City -based tourist agencies, including Saigontourist, Vietravel, Fiditourist and Cho Lon, attracted a great number of domestic tourists this season, due to the substantial increase in living standards. Their tours to local destinations were full. Saigontourist served about 20,000 tourists while its competitor, Vietravel attracted 10,000 tourists on its local tours. Their tours to destinations in the Cuu Long region are fully booked for the next two weeks. Dong Nai coffee exports up 23 per cent in January Coffee exports from southern Dong Nai Province climbed sharply by almost 23 per cent in January, compared with 2013, taking the total to over 14,300 tonnes, the local Statistics Office reported. The United States, Germany and Italy, as well as the Philippines, form the largest export markets for the coffee, the office said. The major coffee exporters from the Dong Nai area are listed as the Huy Company, Tin Nghia Corporation, the Armajaro Viet Nam Company and the Dong Nai Import-Export Processing Agricultural Products and Food Company. The price of coffee beans is now hovering around VND35,000-35,500 (US$1.6) per kilo. It has been predicted that the Viet Nam coffee industry will see a sharp increase in both volume and value in 2014, according to government economists. Safe to invest in property, savings Money should go into bank deposits or the property market as the economy is warming up and these investment channels appear safe and attractive enough, experts said. Viet Nam is aiming to control the inflation rate at below 7 per cent. It is, therefore, expected that the deposit interest rates would not increase much, and will hover around 5 to 8 per cent yearly. However, with the investment scenario being unclear, the people may play it safe with savings. The advice is supported by the State Bank of Viet Nam's announcement earlier this year, which confirmed that they were determined to maintain the strength of the Vietnamese dong. Central Bank Governor Nguyen Van Binh said, "The consistency of the monetary policy will continue in the coming years. Then we can confirm to those who have deposited the Vietnamese dong in banks, and to those who haven't, that they should be more confident about depositing their money in banks. This investment channel is, indeed, secure and attractive." Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management (CIEM) said that regarding the central bank's strategy, the policies might be more supportive of the Vietnamese dong. Determined to hold a consistent and stable monetary policy, experts looked forward to an improvement in public confidence in the local currency. Nguyen Hoang Ha, a depositor at Vietcombank, said: "I choose to secure assets in Vietnamese dong savings. The interest rate is not very high but it's rather more stable than anything else." She added that it's easier to exchange the Vietnamese dong with foreign currencies, than gold with currencies. However, Nguyen Hoang Hai, General Secretary of the Viet Nam Association of Financial Investors argued that the people should not put all their eggs in one basket. He suggested putting 50 per cent of the assets in banks and the remaining into alternative channels. The property market is seen a potential alternative destination. Experts said the local property market's prospects are looking a little bright and busy as it realigns offers for investors and gets ready for some stellar growth during the season. Investors who have always viewed the purchase of property as a profitable, long-term investment channel, now have a wide range of choices opening up before them. The prices of property projects have dropped drastically to levels that buyers will inevitably find irresistible. Since property developers are running against time to sell their projects and expedite sales, they are presenting several promotional programmes, such as offering lower price points, long-term payment schedules and simpler buying conditions. These incentives will attract buyers, despite the current frozen property market. Viet Nam's economic development is looking more promising and positive this year, said Vu Viet Ngoan, Chairman of the National Financial Supervisory Committee. It is said to be the right time and a good opportunity for people to invest, especially those who have a real need for housing. Steel industry hopes for market revival to boost growth Viet Nam's steel industry might achieve 6 to 7 per cent growth this year if the stagnant market is revived, experts said. This year, the Viet Nam Steel Corporation (VSA) has set a target of producing nearly 1.5 million tonnes of steel billets and 2.6 million tonnes of rolled steel, year-on-year increases of 24.5 per cent and 8 per cent respectively. VSA's chairman Ho Nghia Dung said, "The economic growth must reach 5.8 to 6 per cent first, then the steel industry will be able to achieve 6 to 7 per cent growth." Last year, the macro-economic policy aimed at cutting public investment which had trimmed the demand in real estate and construction. Weak consumption forced the steel companies to cut production. According to VSA, 13 cast iron producers worked with 15 to 20 per cent full capacity only and 26 pig iron producers used up to 60 per cent of the full capacity. The total steel billets and rolled steel produced last year equaled 92.4 per cent and 95 per cent respectively of the planned target for the year. In 2014, the Ministry of Industry and Trade (MoIT) will also introduce measures to resolve the difficulties facing the sector. It will work with the Ministry of Finance to help enterprises access more capital to promote their production and business. Nguyen Manh Quan, Head of the Department of Heavy Industry under MoIT, predicted that the steel industry will continue to face fierce competition this year, especially after Viet Nam joins the Trans-Pacific Partnership (TPP). Dung said that the most important element was the government would be formulating proper policies to warm up the steel market. That might boost the real estate and construction sectors which, in turn, will help boost steel consumption. Other experts proposed that the policies need to help enterprises export more steel products and curb steel smuggling in order to set up a fair market for the local producers. Tokyo woos Vietnamese firms with promotions The government of Tokyo will present business opportunities and tourism attractions in the Japanese capital city in seminars held in Ha Noi later this week. The February 13-14 seminars are part of the Tokyo administration's first large-scale promotion campaign in Viet Nam. According to the Tokyo administration, Viet Nam boasts an economy with an impressive growth rate in recent years and the number of Vietnamese citizens travelling to Japan for sightseeing and shopping has increased during this period. It plans, therefore, to work with travel agencies to provide consultancy services on sightseeing destinations in the Japanese capital city and offer preferential deals that will facilitate travel companies and airlines to attract more visitors from Viet Nam. Twenty-nine Japanese businesses have registered to participate in the Tokyo city promotion campaign for 2014. A similar event will be held in the Indonesian capital of Jakarta today. Work begins on road expansion Work began Saturday on a VND4.8 trillion (US$228.5 million) project to expand an 81km stretch of National Highway 1A in the central province of Quang Ngai. Funds for expanding a 52km stretch, estimated at VND2.7 trillion ($128.5 million) will be raised through State bonds, while the remaining 29km will be built under the Building-Operation-Transfer (BOT) scheme. Speaking at the ground-breaking ceremony, Deputy Minister of Transport Nguyen Van Cong said that the expansion was a key national project that would boost socio-economic development in the province in particular and the nation in general. He asked the project investor and contractors to work hard and ensure the project is completed on schedule. In related news, the provincial Department of Construction last Thursday started work on constructing the Chau O Bridge over the Tra Bong River. The VND158 billion ($7.5 million) bridge, 447m long and 20.5m wide, is one of the packages in the project to expand National Highway 1A in the province. Over 20 million kWhs of wind power generated Bac Lieu Wind Power Plant has generated more than 20 million kWhs since it came on stream nine months ago. In May 2013, the first 10 wind turbines were installed with a combined design capacity of producing 56 million kWhs for the national grid. On February 8, 2014, engineers began working on foundations to install 52 more wind turbines along the continental shelf of Bac Lieu city. All the new turbines, imported from the US, are scheduled to be put into operation in the fourth quarter of 2015. Each turbine is made of titan steel, weighs over 200 tones, and measures 80 meters in height and 4 meters in diameter. They are supplied by the US firm General Electric (GE). The new turbines will help increase the wind power output 16fold by 2015. The Bac Lieu wind farm was built in Vinh Trach Dong village, Bac Lieu City, at a cost of more than VND5.2 trillion. A total of 62 turbines with maximum capacity of 99.2MW are expected to generate around 320 million kWh per year. US$1.2 billion paper facility to resume construction The southern Hau Giang province’s People’s Committee has given the green light for Lee & Man Group to resume construction of a US$1.2 billion paper complex. In June 2007, the provincial People’s Committee initially granted an investment license to construct the complex but it has been delayed four times for financial and other scheduling reasons. With a total investment capital of US$1.2 billion including over US$350 million in the first phase, construction is set to resume in April 2014. The complex is expected to be fully operational by 2015 with a capacity of 600,000 tonnes of paper per year. Forecast optimistic for locally made goods for export Exports of Vietnamese goods will rise this year as the global economy continues to grow, according to many trade counselors. Vu Ba Phu, Vietnamese Trade Counsellor in Belgium and Luxembourg, said the EU market had recovered, which will generate higher consumption demand, opening up more export opportunities. Export of electronics, telephones, garments and textiles and footwear to Belgium, for example, enjoyed good growth last year and is expected to continue this year, Phu said. Dao Tran Nhan, Vietnamese Trade Counsellor in the US, said the country would remain a major market for Vietnamese goods, especially seafood, footwear and apparel. Similarly, Chile is becoming an increasingly important market for Vietnam, with exports to the South American country growing at 20 percent per year since 2010, said trade counsellor Tran Dinh Van, adding that a free trade agreement between the two countries coming into effect in the new year would generate more export opportunities for Vietnamese products thanks to lower export tariffs. Vu Huy Hoang, Minister of Industry and Trade, said trade deals, including the Trans-Pacific Partnership agreement, the free trade agreement (FTA) between Vietnam and the EU, and the FTA between Vietnam and the Republic of Korea under negotiation, are expected to open up new opportunities for Vietnamese exports. However, Hoang said to capitalise on opportunities, apart from boosting exports of the country's key export items such as seafood, agricultural products, apparel, leather and electronic products, businesses also should focus on developing new manufactured products that meet the demand of the world market. Chances are abundant but challenges are great too, he said, noting that businesses should keep up-to-date information of both domestic and world markets to grasp opportunities. In addition, domestic businesses need to improve product quality and design to enhance their competitiveness and avoid the risk of losing market share to competitors, according to trade counsellors. Hoang said the ministry would exert more effort to strengthen promotions while speeding up negotiations for trade agreements to expand export markets for Vietnamese goods. Ba Ria-Vung Tau licenses nine new projects The southern coastal province of Ba Ria-Vung Tau granted investment licenses to nine new projects, including two foreign-invested worth US$61 million, on February 8. The two FDI projects are a US$34 million trade centre, invested by Lotte Vietnam of the Republic of Korea and a fertilizer plant worth US$27 million with investments from Behn Meyer Agricare Vietnam of Germany. Seven locally-invested projects are capitalized at over VND6 trillion (US$285.7 million). According to Nguyen Tuan Minh, Secretary of the provincial Party Committee, the province will prioritize investment poured in the support industry for the mechanic engineering, electricity-electronics and chemical sectors. In 2013, Ba Ria-Vung Tau attracted 13 FDI projects worth US$217 million and 29 others invested by local businesses capitalising at VND14 trillion (US$666.6 million). Vietnam’s economic optimism entering 2014 Economists citing the standard depression lifespan of approximately five years believe Vietnam that embraces market principles and pursues international integration will be economically successful. The recent global economic depression had prompted concerns Vietnam and particularly the Mekong Delta region would continue to suffer. But the region, an aquaculture hub, is seeing positive signs, with January seafood output estimated at 399,000 tonnes. The improvement represents a 0.8% rise in quantity and an almost 14% rise in value compared to a year earlier. Tien Giang-based Go Dang Seafood Joint Stock Company’s new factory entered into operation near the start of 2014, part of its plans to explore emerging markets. The company’s General Director Nguyen Van Dao says gradual economic recoveries in Japan, the US, and Europe are a boon to Vietnamese exporters. New markets in the Middle East have also started importing more products. The new factory, with a daily capacity of 1,200 tonnes, will hopefully double Go Dang company’s 2013 export value to around US$50–60 million. At the beginning of 2014, Tien Giang’s industrial zones added six new foreign direct investment (FDI) projects. The province’s 43 total FDI projects are worth more than US$1.4 billion. The new year also marked the introduction of a number of macroeconomic stimulus policies such as tax exemptions, interest rate stabilisation, the relaxation of financial and credit conditions, and the acceleration of public investment capital. . Vo Thanh That, Personnel Department Head for the Korean company Hansea, says the company has asked authorities to reserve an additional 20 hectares for expanding its Tien Giang factory. Hansea will also increase its local labour force from its current 3,300 workers to 13,000 by 2015. Twenty Vietnamese commodity categories earned export revenues above US$1 billion each in 2013. The garment and footwear sector reports it has already received substantial orders  for the first and second quarters of this year. New economic driving forces will arrive in the form of the imminent Trans-Pacific Partnership Agreement, the Free Trade Agreement with the Customs Union of Russia-Belarus-Kazakhstan, and the Free Trade Agreement between Vietnam and the EU. Economists say increasing trade and consumer demand have landed Vietnam among the 25 countries with highest growth. The Government’s economic management strategy—focused on restructuring, balancing supply and demand, and improving efficiency and productivity—will lay firm foundations for further development in 2014. Asian Park Danang set to open to public in 2014 Sun Group plans to put Asian Park, an amusement centre in Danang city, into operation by the end of this year. The structure, designed by landscape architect Bill Bensley, is being built on an area of 880,082sq.m, including 116.874sq.m under water, in Hai Chau district at a total cost of about VND4,000 billion. The project includes a cultural park, a play park, a multi-functional performance area and a car park. It is expected to attract around 2.5 million visitors per year. The cultural park, covering 3ha, will feature nine distinctive Asian cultures of Japan, India, Cambodia, Indonesia, Thailand, the Republic of Korea, China, Nepal and Vietnam. The play park will consist of many new, adventurous and modern games for children to play. In 2014 Danang plans to invest VND27,300 billion in development projects, an annual increase of 4%. It aims to turn tourism into a key economic sector. FDI capital down in January  Vietnam attracted US$397 million in foreign direct investment (FDI) capital in January, equal to 78% of January 2013’s figure. Six existing projects registered an additional 186 million, up 183% compared to the previous year, according to the Ministry of Planning and Investment. They include a Singaporean-invested VSIP Haiphong project to supply urban management and industrial services, and a Midea Consumer Electric Vietnam-invested project to produce electric equipment and components in Binh Duong province. In January, 40 new projects were licensed totaling US$211 million, equal to 47% of the corresponding figure last year. On the contrary, FDI disbursement rose 3.3% in the reviewed period to around US$465 million. The FDI sector’s exports (including crude oil) were valued at approximately US$6.78 billion, equal to 90.8% of last year’s figure and accounting for 65.83% of the country’s total export value. Foreign investment was channeled into nine key areas, with the processing and manufacturing industry taking the lead with 25 projects capitalized at US$189.04 million. It was closely followed by real estate and logistics attracting US$176.33 million and US$17.05 million, respectively. Singapore topped the list of foreign investors in Vietnam in January, pouring in US$132.65 million. It was followed by the Republic of Korea (US$88.8 million) and Hong Kong (US$44 million). Haiphong city was the biggest FDI attractor with US$123.3 million or 31.05% of the total. Binh Duong and Ba Ria-Vung Tau came in second and third, with US$71.32 million and US$61.54 million, respectively. Vietnam, India eye US$7 bln in trade value Two-way trade between Vietnam and India has grown and flourished over the years and both countries are looking towards a US$7 billion target in 2015. Nguyen Son Ha, Vietnamese Trade Counsellor to India, says India is one of Vietnam’s top ten trade partners and the latter is the former’s fourth biggest trade partner within ASEAN. Bilateral trade increased threefold to US$5.24 billion in 2013 from just US$1.54 billion in 2007. Of the total, Vietnamese exports generated US$2.35 billion, up 13 times, and its imports were US$2.88 billion, a twofold increase. Party leader Nguyen Phu Trong addressing a Vietnam-India business meeting in New Delhi during a visit in November 2013 Vietnam and India are increasing their trade ties through a host of measures, including finalising the legal corridor for trade and investment facilitation. The Vietnam-India trade subcommittee meets every year to chart a course for trade cooperation between the two countries. Both sides have carried out national cooperation programmes and exchanges on trade and investment promotions, and organised trade fairs, exhibitions and joint business forums in each country. They have encouraged businesses to invest in the areas of their strength, supported businesses in opening representative offices in each other’s territories, and facilitated business people’s travel. They are considering opening direct air routes to support economic, trade, investment and tourism development, as well as cultural exchanges. India has recognised Vietnam’s full market economy status. Both countries have signed numerous agreements, including the ASEAN-India Trade in Goods Agreement (AITIG), to assist business communities to access their markets. Vietnam and India established the strategic partnership in July 2013 and increasing bilateral trade is one of the five pillars in their strategic partnership.  Central bank prioritises currency market stability The State Bank of Vietnam (SBV) is committed to a flexible approach to management that maintains currency market stability and increases foreign currency reserves. The central bank considered 2013 a successful year, immediately and successfully intervening in the market when necessary to keep exchange rates under control. It even had no need to push the limits of its own set 2–3% rate adjustment margin. The central bank’s decisions helped stabilise exchange rates, increase foreign currency reserves, and enhanced consumer trust in the domestic currency (VND). SBV Deputy Governor Nguyen Dong Tien says the bank recognises the importance of leaving enough management leeway to respond to any unforeseen market developments. Last year, this flexibility helped authorities quash damaging rumours and cool off the foreign currency market before pressures escaped control. “Consistency reinforces market trust,” Tien says. “Fluctuations are only short term.” He attributes the bank’s 2013 successes to its responsive management of foreign currencies, gold, and the anti-dollarisation push. “Gold is no longer a primary lending instrument. Gold traders can conduct transactions through appropriate networks. This stabilises the exchange rate.” National Financial Supervisory Council Vice Chairman Truong Van Phuoc says the SBV removed gold from credit organisation transactions after anticipating foreign currency market instability. “These administrative interventions are tough but help maintain the value of the domestic currency against the US dollar.” SBV Deputy Governor Tien affirmed the central bank will continue its policy flexibility into 2014, hopefully reducing the economy’s dependence on dollars and gold and supporting export business growth. He says the bank will manage the currency market according to the National Assembly’s set 5.8% economic growth target and 7% inflation maximum. Economic experts concur on the need for flexibility but warn the ramifications of any adjustments must be examined to avoid big shocks to the economy. SBV Foreign Currency Management Department Head Nguyen Quang Huy believes the bank’s most appropriate management mechanism is currently short-term exchange rate adjustments. The bank also needs hedging instruments to limit exchange rate risks, as rare as their use may be. Huy thinks the central bank faces three major currency market management challenges in 2014: an imbalance between demand and supply, market manipulation, and unpredictable investor psychology. He admits management is made harder by exchange rates’ dual role as “both a management tool and a management target.” As an instrument, it can help augment foreign currency reserves, stabilise the macroeconomy, improve competitive capacity, and ensure credit organisations operate safely. New resolution cuts investment red tape Many unnecessary administrative procedures will be cut out when a new resolution on administrative procedures reform in investment projects is approved by the Government. The draft resolution, which was announced at a Ministry of Justice meeting in Hanoi on February 7, aims to simplify administrative procedures in investment projects and improve the business environment. Justice Minister Ha Hung Cuong said the simplification of administrative procedures at many state agencies is still slow and unsystematic. Many agencies even add extra requirements for individuals and enterprises. Administrative procedure fees in Vietnam ranks the highest in the world. The draft resolution proposes measures to simplify administrative procedures in investment project implementation, including the abolishment of unnecessary and ineffective administrative procedures. The "One-door" policy will also be applied aggressively in these investment projects. Other measures on administrative procedures transparency will help prevent corruption and create trust for individuals and enterprises in investment and business activities. The number of administrative procedures that enterprises have to follow from the beginning to the implementation phase will be cut down from 34 to 22. Accordingly, the time frame will be reduced up to 50%. Individuals and enterprises, thus, can save up to VND1.3 trillion (US$61 million) every year. Cuong asked relevant agencies to address properly individuals and enterprises' responses and recommendations on administrative procedures reform and timely tackle government staff corruption and wrongdoings related to investment procedures. He also required that the assessment of the draft resolution be conducted effectively to prevent from the beginning unnecessary procedures. HCM City aims for more FDI HCM City has already licensed 15 new foreign direct investment (FDI) projects totaling US$19.9 million in January, up 15.4% in volume and 51.5% in value from a year earlier. The city also authorised US$3.3 million in additional investment for two projects, bringing total FDI capital to US$23.2 million or 32.4% higher than January 2013. City authorities licensed 1,415 newly established businesses with registered capital of VND7,111 billion. But other Vietnamese cities and provinces saw January 2014 FDI flows slow to a trickle, down 50.6% in volume and 52.4% in value compared to a year ago. HCM City looks to promote credit growth The banking sector in HCM City is developing measures to increase credit growth to 12 -14 per cent by strengthening links between banks and companies, according to an official from the State Bank of Viet Nam. The HCM City branch deputy director, Nguyen Hoang Minh, said the local sector would likely double the credit line for enterprises to between VND25 trillion and VND30 trillion. In addition to priority sectors such as agricultural and rural areas, exports, small- and medium-sized enterprises and the support industry, local banks will also expand lending to many other sectors, particularly to enterprises that use high technology, he said. The central bank has also given the green light to local commercial banks to create favourable conditions that would allow companies to use their receivables as mortgages in order to qualify for bank loans. The city's People's Committee has proposed that the central bank provide updated information on its new policies so that implementation by the city can proceed effectively. To create better conditions for enterprises to promote their competitive advantages, the committee has also suggested that the central bank reduce the lending interest rate for priority sectors. The central bank, the committee said, should also develop measures to settle bad debts to ensure that the entire banking sector's operations are transparent, safe and effective. These measures would help terminate "cross-ownership and group benefits" between banks, it said. The committee also proposed that the central bank adjust its Official Dispatch No.7558/NHNN-TD which includes solutions on how to handle difficulties faced by credit institutions and customers. This action would make it a legal document and would give more time to credit institutions and enterprises to implement the policy. State Bank Governor Nguyen Van Binh said the central bank would consider HCM City's credit-growth promotion measures and work with ministries and branches to offer proposals to the Government that would improve credit policies. Such action would result in more open and favourable conditions for banks' credit growth and enterprises' business activities, he said. Last year, thanks to close links between local banks and credit institutions, 533 enterprises, 68 household-production establishments and two cooperatives in 2013 in HCM City received bank loans totalling VND14 trillion (US$633.50 million). These were offered with the interest rate of under 9 per cent per year for short-term loans and 12 per cent for medium- and long-term loans, according to the State Bank of Viet Nam branch in HCM City. These preferential interest rates were applied to businesses in priority sectors as well as companies in many other sectors. According to the city's People's Committee, total bank loans reached VND952 trillion (US$45.2b) in 2013, a rise of 9 per cent compared to the previous year. Loans at an interest rate of below 9 per cent given to five priority sectors accounted for 83 per cent of the total. Sixty-four per cent of these were offered to small- and medium-sized enterprises. Roads, bridges help ease traffic congestion Road and bridge construction projects that were completed in 2013 have helped to significantly decrease traffic congestion in Ha Noi and HCM City, according to the Ministry of Transport. "This year, the ministry will continue to implement comprehensive solutions to reduce traffic jams in Ha Noi and HCM City," Deputy Transport Minister Le Dinh Tho told Nguoi Lao Dong (Labourer) newspaper recently. This year, the ministry will urge investors to speed up all transport projects, he added. "We will finish 58 projects and begin 35 others," Tho said. Many projects are scheduled to either start or continue this year, including the expansion of National Highway 1 and Ho Chi Minh Highway through Central Highlands provinces. Other highway projects include: Ha Noi – Thai Nguyen, Noi Bai – Lao Cai, Ha Noi – Hai Phong, Da Nang – Quang Ngai, HCM City – Long Thanh – Dau Giay and Ben Luc – Long Thanh. The Vinh Thinh bridge (Vinh Phuc – Ha Noi), Nhat Tan bridge, and a connecting road to Noi Bai international airport will also be built this year. In 2013, the ministry completed 46 projects and began construction on 78 others. In addition, 800km of national highway and 5km of bridge were upgraded. "2013 was the year that we improved management, and there were no more delays in construction. Many projects were completed earlier than expected," Tho said. A series of new and modern roads have not only reduced congestion but also the cut the number of traffic accidents. For example, the HCM City – Long Thanh – Dau Giay highway has reduced trips by 40 minutes. The time for travel between HCM City and Vung Tau is now only 1.5 hours instead of the previous 2.5 hours. The new National Highway 3 with nearly 64km has reduced travel time from Ha Noi to Thai Nguyen Province to one hour and 20 minutes instead of three hours. Last year, in an effort to reduce traffic jams, the ministry closely worked with local authorities, especially in Ha Noi and HCM City, to speed up important transport projects, including a flyover. Ha Noi has completed seven flyovers and HCM City five. All of them are located in areas that once had regular traffic jams. Other places for flyovers are also being proposed. Ha Noi will build three at the Buoi – Cau Giay inter-section and HCM City will build one at the Go Vap cross-roads. Thanks to such construction, the traffic situation in Ha Noi and HCM City has improved, particularly compared to 2011. Areas that regularly experienced traffic jams fell to 46 per cent in Ha Noi and nearly 37 per cent in HCM City. The length of traffic jams also declined, Tho said. With many more roads and bridges due to be completed this year, HCM City hopes to improve traffic congestion as well as ensure smoother connectivity with its neighbouring provinces, according Vuong Hoang Thanh, deputy director of the HCM City Urban Upgrade Construction and Investment Management Board. Of the many traffic projects to be completed this year, four bridges are to be demolished and rebuilt, including Bong, Kieu, Le Van Sy and Hau Giang bridges. The bridges play an important role in ensuring the smooth flow of traffic in HCM City, Thanh said. Rebuilding the four bridges will cost some US$30 million, which has been sourced from the World Bank ODA loans, so they must be completed before October, he added. The projects are on target to meet the deadline, he said, adding the developers are currently speeding up their projects in order to comply with the schedule. In addition to the bridges, the entire of the Tan Son Nhat-Binh Loi-Outer Ring Road or Pham Van Dong Road is expected to be finished by the end of this year. The 13.6km road has 6-12 lanes, and passes through four districts: Thu Duc, Binh Thanh, Go Vap and Tan Binh. It starts at Tan Son Nhat international airport in Tan Binh District and ends at Linh Xuan intersection in Thu Duc District. The road has 13 crossroads and four large bridges, including Binh Loi, Rach Lang, Go Dua and a flyover passing over National Road 13. The project, which was invested in by the GS Engineering and Construction Corporation, has received a total investment capital of nearly $500 million and is being constructed under the B-T (build-transfer) model. The road is one of the four outer ring-roads which are part of the city's traffic planning until 2020, and plays an important role in connecting traffic between HCM City and the southeast provinces. HCM City accelerates key transport projects Workers are busy on key transport projects in Ho Chi Minh City on the first days of the Lunar New Year in order to progress as scheduled. In the baking sun during the southern springtime, engineers and workers are losing themselves in work at the Bong bridge construction site in District 1 to speed up progress on the important project. Apart from speeding up the progress, constructing units are required to ensure safety while working and moving around the construction site. Work started on February 6 on a replacement for the Kieu Bridge spanning the Nhieu Loc-Thi Nghe cannel. The new bridge connecting District 1 to Phu Nhuan district will cost 115 billion VND (5.4 million USD), helping ease traffic congestion in the area. They key transport project in the city’s crowded area is expected to be completed by the end of July. Ho Chi Minh City is currently implementing a number of projects on the new construction or upgrade of old bridges such as Bong, Le Van Sy, Kieu and Hau Giang. According to investors, the projects are all on schedule. All four bridges are expected to be open for traffic from the middle of the year, catering the transport demands of local people.- Local sectors enjoy trade surplus Vietnam enjoyed a trade surplus of over one billion USD with 16 markets in 2013, according to the General Department of Customs. During the year just gone, Vietnam traded over 264 billion USD worth of goods with close to 240 nations and territories. The total import-export turnover of the 16 above-mentioned markets accounted for almost 90 percent and 88 percent of the nation’s exports and imports respectively. The United States, Japan and China are three markets Vietnam has recorded a trade surplus of over 10 billion USD. The US remains the biggest importer of Vietnamese goods, with a trade surplus estimated at 18.64 billion USD. Vietnam saw trade deficits of over 10 billion USD with China, the Republic of Korea and Japan last year.- Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR