BUSINESS IN BRIEF 13/4 VinaWealth launches open-ended fund VinaWealth Fund Management Company JSC has launched the VinaWealth Equity Opportunity Fund (VEOF), under the IPO granted by the Vietnam State Securities Commission on March 14. The VEOF is VinaWealth's second open-ended fund and is focused on equities listed on Vietnam's growing stock market. It is a type of managed mutual fund that is popular in other markets. A mutual fund pools money from many investors into a basket of different instruments, which may include stocks, bonds, valuable papers, and other assets. The fund's scale allows it to diversify the portfolio of assets. This increases the likelihood of generating higher returns while mitigating risks. VEOF is managed by a team and support from the VinaCapital Group, Vietnam's leading asset management firm with over 1.5 billion USD in assets under management as of December 31, 2013. According to Andy Ho, chief investment officer of VinaCapital Group and board member of VinaWealth, "now is a good time to launch an open-ended equities fund. In 2013, the Vietnam stock market gained 22 percent, the highest gain among Southeast Asian markets." "According to our analysis, Vietnam's stock market is likely to maintain growth in 2014, based on positive macro-economic indicators such as export growth, increased foreign direct investment (FDI), controlled inflation, a stable exchange rate and lower interest rates, which are stimulating business activity and overall demand. "Furthermore, foreign investors continue to show interest in Vietnam's market and were particularly active in investing into Vietnam's stock market during the first quarter of 2014. VEOF will provide both domestic and foreign investors with the opportunity to participate in the Vietnam stock market and enjoy returns in 2014 and the years to come," he said. Banks cut rates on capital surplus Many banks have slashed interest rates to below the ceiling level of 6 percent regulated by the State Bank of Vietnam (SBV) amid abundant capital. Deposit interest rates listed at the Vietnam Export Import Bank (Eximbank) for the term ranging from one to three months has been cut to 5.7 percent from the previous 6 percent rate. The deposit interest rate for the 4-5 month term has also been slashed to 5.98 percent from 6 percent. Sacombank has also cut the deposit rate for the term of between seven and 11 months. The annual rate of 6.55 percent has been applied to the 7-8 month term, while 6.7 percent has been set for a 9-10 month term and 6.8 percent for the 11-month term. According to the central bank, credit in the first quarter this year rose only 0.01 percent, showing that banks are enjoying a surplus of capital. Despite the abundant capital, interest rates are still above the deposit rate ceiling in some ailing banks, according to the Phap luat TP HCM newspaper. Deputy Governor of the State Bank of Vietnam Nguyen Phuoc Thanh said that the interest rates over the deposit rate ceiling had greatly reduced, showing that in spite of solid liquidity in some aspects of the banking system, it was not a uniform trend. He explained that the liquidity of some ailing banks was so restricted that it was forcing them to try to attract depositors with interest rates above the ceiling rate. Thanh said that the central bank would plan to boost competition in the banking sector by solidifying the banking industry through restructures and weeding out weak banks. In a foreacast on credit sector trends in the second quarter of this year released last week, most credit institutions said deposit and lending rates in Vietnamese dong would continue to decline this year.- Draft Hanoi Metropolitan Region Planning under discussion The Steering Committee for Hanoi Capital Metropolitan Planning and Construction Investment is seeking opinions from the Government, localities, ministries and branches to complete the Hanoi Capital Metropolitan Construction Planning to 2030, with a vision to 2050, according to the Vietnam Business Forum. The Steering Committee recently met with central agencies to assess the draft to the Hanoi Metropolitan Region Construction Planning. Accordingly, Hanoi will be developed into an integrated multi-polar megacity. The expanded metropolitan construction planning, according to Decision 1758/QD-TTg of the Prime Minister, covers nine provinces and original Hanoi. The inclusion of Phu Tho, Thai Nguyen and Bac Giang provinces expands the capital region by approximately 80 percent, with a natural land area of over 24,314 square kilometres and a population of 17,495 million. To complete the scheme, the consultant - Urban and Rural Planning Institute - has worked with nine provinces and Hanoi city together with experts in planning, health, industry and commerce and other fields. Under the draft planning, by 2050, the metropolitan region will be an integrated multi-polar megalopolis with development driving complexes like the high-tech training, research and development centre, the industrial development centre (Thai Nguyen), industrial - service - ICD - logistic development centre (Bac Giang and Bac Ninh), and the human resources training centre. The new triangle will be formed by Hanoi, Bac Ninh and Vinh Yen. According to the Urban and Rural Planning Institute, the metropolitan region planning will be more feasible, more sustainable and closer. This assessment is based on the perspective that the urban, industrial and logistics development of the metropolitan region will be planned and its investment will be phased based on transport infrastructure development and ensured access to new development areas. Planning orientations for economic and social infrastructure, tourism, education, agriculture, forestry and fishery, environment and other aspects are detailed in the scheme. Remarking on the consultant’s orientation to Ring Road 5, Transport Deputy Minister Nguyen Hong Truong said that the direction towards the south of Phu Ly is more appropriate as it helps expand the space of the metropolitan region. He added that Ring Road 5 should not go further than Tam Dao Tunnel since it is related to conservation areas, national defence, security and high cost. Representatives of many localities suggested that the scheme need regular industry and sub-region planning updates to make necessary changes to suit actual situations. A representative from Vinh Phuc province said that, according to the overall planning of Vinh Phuc province, the area of industrial parks is 7,000 ha but the metropolitan region plans only 6,000 ha. Thus, the consultant necessarily takes a review and points out the area and location of industrial zones to be shrunk. Nguyen Van Khoi, Vice Chairman of Hanoi People’s Committee, said the consultant needs to update and assess the current state of socio-economic development of Hanoi and the other 9 provinces and review the coupling of approved specialised plans. He proposed an early regime for coordination of the provinces in the region to carry out the planning. To this point, the metropolitan region planning has been going for five years. Therefore, it is very essential to assess what has been done to draw experience. With respect to financial and investment resources, the Ministry of Finance asked the consultant to make this matter clearer in order to help localities with a legal basis for implementation and study investment roadmap and phasing because this is a long-term planning. Conference discusses cooperation with French locality Bright prospects are visible in the Vietnam-France cooperation in general and between Vietnam and the French department of Indre et Loire, heard a conference held in Tours city on April 10. Addressing the event, Deputy Mayor Christophe Bouchet said that his city sees great opportunities for cooperation with Vietnam due to cultural similarities between the two sides. The French city has increased activities to step up the bilateral cooperation, hoping Vietnam to become its long-term economic partner, added Bouchet. He also noted that cultural exchange activities between the two sides have been boosted through photo exhibitions, film screening programmes, and Vietnamese art troupes’ programmes in France. Ambassador Duong Tri Dung briefed participants on the development of bilateral cooperation between the two countries, especially economy, noting that two-way trade reached 3.5 billion EUR (4.86 billion USD) last year. He also highlighted the two countries’ great potential of economic cooperation, and encouraged businesses in Indre et Loire department to invest in Vietnam. The conference also heard a report presented by commercial counsellor of the Vietnamese Embassy in France Nguyen Canh Cuong, focusing on investment opportunities and the country’s promising fields, including garment and textile, footwear, aquatic products, machinery and infrastructure. In another move, Chairman of the Touraine-Vietnam Friendship Association Jean-Jacques Rousselle introduced the 2014 Vietnamese Spring in Touraine programme that featured 30 activities related to culture, cuisine, and arts, at a meeting held by the association and the Saint-Cyr-sur-Loire city. Ambassador Dung thanked the association for its contributions to the Vietnam Year in France and the boosting of the mutual understanding and friendship between the two countries as well. Japan to help improve Southeast Asia’s investment climate The Japanese Government has said it will increase its support to improve the investment climate of Southeast Asian countries by helping them perfect their legal systems and management of business activities, according the Nikkei newspaper. Japan will assist court officials of Indonesia in terms of intellectual property rights protection. This year, Japan is sending its experts to help the Supreme Court of Indonesia and provide knowledge of economics for Indonesian judges, along with learning materials and scholarships to further their studies and research. Japan also plans to help Cambodia perfect legal regulations related to the establishment and management of special economic zones (SEZ) as the ASEAN member country has seen different rules on managing the economic entities. Myanmar will receive assistance to reform its Law on Enterprises and specify SEZ-related rules. Japan’s support aims to back its businesses’ operation in ASEAN countries, enabling them to further boost their investment and business activities in the bloc. The market of a combined population of 600 million will draw more attention from businesses of the US, Europe and Japan when the ASEAN Economic Community is established in 2015. "Buy Vietnamese Goods" receives warm welcome in Lao Cai Launched 3 years ago, the "Buy Vietnamese Goods" campaign in the northern province of Lao Cai has resulted in an increased sales volume of Vietnamese goods, said the Vietnam Economic News on April 11. According to Lao Cai’s provincial Steering Committee on the Buy Vietnamese Goods campaign, the provincial Department of Industry and Trade, and the Investment and Trade Promotion Centre have coordinated with the local media agencies to advertise the campaign. In addition, Lao Cai province also instructed and assisted 35 enterprises to label their products. The local businesses have actively responded to the campaign in various forms such as adopting scientific and technological applications to improve product quality, saving costs and reducing prices in a bid to increase competitiveness. Distributors and supermarkets in Lao Cai have also enhanced sale promotion activities and commercial programmes to attract consumers' attention to their locally made products. In addition, collaboration between Lao Cai and other provinces like Hanoi, Bac Giang, Hung Yen to boost agricultural sales were successfully implemented. The programme attracted 35 enterprises with 60 booths such as shoes, clothing, ceramics, handicrafts and food. The total number of customers visiting these booths climbed up to over 20,000, lifting sales revenues to over 1.5 billion VND. To stabilise the market and protect consumer interests, Lao Cai’s Department of Industry and Trade coordinated with market management forces to tighten market control over contraband or fake goods. After more than three years of the campaign, Lao Cai’s market management forces have tackled 436 violations with total value of more than 500 million VND. The campaign has changed consumer awareness and behaviour towards Vietnamese goods while improving the awareness of the domestic business community about the importance of the local market. Many local producers have continually improved quality and designs, reduced prices and developed brands to raise competitiveness in the market like Lao Cai Pharmaceutical Company and Apatit Vietnam Company. The campaign also contributed to boosting production and easing the country’s economic slowdown in general. Until now, according to statistics of the Lao Cai’s provincial Buy Vietnamese Goods Steering Committee, locally made textile and garment, clothes, footwear, automobiles, motorcycles and electronic equipment have accounted for 60 percent of all commodities of those kinds in the province while toys and learning tools for kids have accounted for 70 percent, office stationary accounted for over 72 percent and drugs and medical service accounted for over 63 percent. Apart from positive results, the campaign is still facing a lot of challenges as Lao Cai is a border province and Vietnamese goods here have to compete fiercely with smuggled, fake or imported products from China. Therefore, according to Lao Cai’s Department of Industry and Trade, the province will continue introduing the campaign to all villages and districts in the area, raising local people's awareness on the quality of Vietnamese goods and services. Dong Nai determined to create sound investment climate The southern province of Dong Nai, one of the country’s leading FDI receivers over the past years, is determined to reject infeasible foreign-invested projects for a more sound investment climate. The province now has 1,080 valid projects valued at more than 20 billion USD after 25 years of FDI attraction. Although the number of FDI enterprises accounts for one tenth of all businesses operating in the province, foreign-invested firms have contributed 92 percent to the locality’s volume of exports, generating jobs for over 450,000 labourers. However, the province still has around 10 green-field (FDI) projects that have not been implemented after more than a year since receiving investment licences, said Mai Van Nhon, deputy head of the provincial management board overseeing industrial parks (IPs). To date, the province has also seen 47 FDI projects valued at more than 100 million USD in total, abandoned by their investors. Most of the projects were in debt to their partners, local commercial banks and labourers, causing negative impacts on the province’s investment environment. Since the 1990s, it has withdrawn investment permits granted to 186 FDI projects with a total investment capital of nearly 1.3 billion USD. Nhon said the majority of the projects whose investment licences were revoked by the province are small-scale, adding that this is one of the measures to improve the local investment climate. He added that the management board has worked with relevant agencies to handle the assets and land rented by 17 FDI projects abandoned, withdrawing their investment permits. The province is also considering other measures to tackle the remaining abandoned FDI projects. By attracting FDI in a selective manner, the province has drawn a number of projects in high technology and support industry, like Pegasus-Shimamoto Auto Parts Vietnam Co., Ltd, Fuji Vietnam Co., Ltd, and Inoue Rubber Vietnam JSC. To fulfil this year’s target of attracting around 900 million USD in FDI, Dong Nai promulgated many investment incentives. Particularly, newly foreign-invested projects and those with additional investment will be exempted from corporate income tax in the first two years of operation and get a 50 percent reduction in the four subsequent years, while the common tax rate imposed on investment projects in local IPs will drop to 22 percent from 25 percent. In addition, the province has established an office to directly support foreign investors and provided small and medium-sized FDI enterprises with special assistance related to investment licences. Nhon also affirmed that Dong Nai has completed the construction of infrastructure in IPs and will give priority to high-tech, environmentally friendly projects and those in the fields of services and infrastructure investment. Mexico looks to import seafood from An Giang A delegation of Mexican businesses made a fact-finding visit to the Mekong Delta province of An Giang on April 10, seeking opportunities to import tra and basa fish from the Vietnamese locality. The delegation inspected the farming and processing of the fish and learned about An Giang’s export directions, aiming to import tra fillets and fast food. Alex Orozco, an executive of Mirpac Norte Mexico, said he is satisfied with the production and the quality of fish products made by local businesses. Fish products, especially tra/basa fillets, and rice are key exports of An Giang at present. The province farms about 300,000 tonnes of tra fish every year while 17 of its businesses ship aquatic products to nearly 100 countries and territories worldwide. According to the provincial Department of Industry and Trade, An Giang gained 93.5 million USD from exporting 38,600 tonnes of frozen seafood in the first quarter of 2014, up 10 percent in value and 5 percent in volume from a year before. Mexico is a new market for local enterprises. In mid-March, the Mexican Rice Council also visited the province to learn about its production and export of rice.- Quang Ngai calls for more investment in industrial zone Quang Ngai, the central province in Vietnam, will further develop its industrial sector in a bid to attract more investment in the coming period, stated a provincial official. During an online dialogue with the Cong thuong newspaper regarding the development of the industrial sector in Quang Ngai held in Hanoi on April 8, Pham Nhu So, the vice chairman of the People's Committee of Quang Ngai province and the head of the management board at Dung Quat Economic Zone, noted that after 15 years of development, the Dung Quat Economic Zone has promoted economic development in the province and is considered one of the most successful and swiftly developing economic zones in Vietnam. The economic zone has attracted 113 projects with a total registered capital of 8.5 billion USD and disbursed capital worth 5 billion USD for 73 projects operating in the zone. The first heavy industrial centre of Vietnam was developed at the Dung Quat Economic Zone and has plants of oil refinery, thermo-electric, steel, plastic package, ship building, biofuel, paper and cement, and a system of ports and industrial services. Last year, the total value of industrial output and commercial services in the Dung Quat Economic Zone reached 130 trillion VND (6.19 million USD). Therefore, the province has invested heavily into infrastructure at industrial zones and economic zones and has targeted to achieve a growth rate of 17-18 percent each year in the industrial sector by 2015, So remarked. Quang Ngai plans to expand some existing economic zones to attract 5 billion USD more in investment capital to the industrial zone, he added. The province has hired a Japanese consulting company to review a plan of the Dung Quat 2 deep-water port to further develop its industrial sector. A Singaporean group has conducted an investment study in the province in order to build an electric project with a total investment of 2 billion USD and a Japanese investor also has a plan for building a steel factory, So added. Tran Dinh Thien, the director of Vietnam Economic Institute, stressed that Quang Ngai is one of the most attractive places for investment in the central region. According to the provincial competitive index (PCI) in Vietnam, Da Nang in the central region ranks first, followed by the Thua Thien-Hue province, and Quang Ngai ranked seventh. To reach those places, the city and provinces have policies to improve the business and investment environment. The Quang Ngai province has the advantage of having deep-water ports, attractive investment incentives, and has restructured its economy to attract more investment, Thien claimed. Ryuhang Ha, the general director of Doosan Vina Company, emphasised that the company has chosen the Dung Quat Economic Zone to develop its project of producing heavy industrial equipment for the sector of electricity, water, and chemical treatment, since the zone offers favourable conditions in providing services related to deep-water ports that the company needs. Dung Quat offers fast site clearances and investment incentives for enterprises, including corporate tax and individual tax, he reported. Vu Quang Vinh, the senior marketing director of Vietnam-Singapore Industrial Park (VSIP), stated that VSIP has invested in Quang Ngai for developing an industrial park because the province is an ideal place for manufacturing products for the markets in north and south Vietnam, Laos, north-eastern region of Thailand, and Cambodia. Nguyen Manh Quan, the head of the heavy industrial department of the Ministry of Industry and Trade, remarked that Quang Ngai has a geographical disadvantage, but its heavy industrial sector has developed and has large projects because the province has created conducive conditions in infrastructure, policies, and administrative procedures. Mekong Delta tasked with ensuring food security As the nation’s key rice producer, the Mekong Delta has been tasked with ensuring the country’s food security, according to the Southwestern Steering Committee. From now to 2030, the region is growing rice on an area of 1.8 million ha, more than half of which is for export. It is also striving to maintain an annual output of 24-25 million tonnes of rice. Coastal provinces in particular will apply a model that combines rice cultivation and fish and shrimp breeding on an area of 200,000 ha in the future. They plan to use more than 110,000 ha of land for growing maize and soya bean to supply materials for the domestic processing industry. Local authorities and scientific agencies have worked together to create new high yielding varieties that are able to adapt to climate change and are disease resistant. They have also promoted the mechanisation of farm work, popularised sustainable farming techniques, and expanded areas for clean rice, altogether to cater for the increasing demand on local consumption and export. From 2015 onwards, the region plans to multiply cultivation under the Good Agricultural Practices (GAP) standards to achieve at least 40 percent clean rice, as well as reform technology to generate high returns from processed rice products. According to the Ministry of Agriculture and Rural Development, total rice consumption will be increased to 35 million tonnes by 2020 and 37 million tonnes by 2030 as the nation’s population is estimated to rise to 100 million and 110 million respectively. The Mekong Delta region comprises of 12 provinces and a centrally-run city with a total area of 40,000 square kilometres and a population of 18 million.- Rubber group opens new representative office in Laos The Vietnam Rubber Industries Group (VRG) has inaugurated its new representative office in Laos, aiming to strengthen the cooperation efficiency between the firm and local partners. Addressing the launching and licence granting ceremony on April 10 in Vientiane, Bounthavi Sixouphanthone, Lao Deputy Minister of Planning and Investment, pledged to create all possible conditions for the office to operate effectively. Tran Ngoc Thuan, VRG General Director, thanked the Party, State and people of Laos for supporting the firm’s investment in the country, contributing to speeding up poverty reduction in Laos, upgrading the infrastructure system and improving the living conditions for locals in the group’s project sites. He tasked the office to well perform its role as the face of a major Vietnamese state-run group in the host country, helping consolidate the special relations and comprehensive partnership between Vietnam and Laos.- FDI to increase despite sharp decline in first quarter Foreign direct investment (FDI) in Vietnam in the first three months of this year accounted for only 50.4 percent of that recorded in the same period last year. However, experts said that it was too early to say that FDI would reduce in 2014, the Vietnam Economic News reported on April 10. According to the latest statistics from the Foreign Investment Department under the Ministry of Planning and Investment, Vietnam attracted 3.334 billion USD in FDI in the first quarter of this year accounting for 50.4 percent of figure recorded a year ago. The investment capital comes from 252 new projects with total registered capital of 2.046 billion USD (accounting for 64.1 percent of what a year ago) and 82 ongoing projects which increased their capital by 1.287 billion USD (39.3 percent). The Foreign Investment Department said that the decline in FDI in the first quarter of this year was because Vietnam gave investment licences to several very large projects in the first quarter of last year such as the Samsung Electronics Vietnam Thai Nguyen Co. Ltd.’s 2 billion USD project and the Nghi Son Oil Refinery Co., Ltd.’s project in the Nghi Son Economic Zone in Thanh Hoa Province which increased its capital by 2.8 billion USD. However, Vietnam did not attract such large projects in the first quarter of this year. Specifically, the largest FDI projects registered in the first three months of this year have investment capital of just over 200 million USD each. For example, the Canadian-invested Hai Duong-based Dai An Vietnam-Canada International Hospital Co. Ltd. project has capital of 225 million USD. The Japanese-invested Binh Duong-based Wonderful Saigon Electrics Co. Ltd. project has increased its investment capital by 210 USD million manufacturing and assembling semiconductor equipment. The Hong Kong-China-invested project to build apartments and shopping facilities in Ward 22, Binh Thanh district, Ho Chi Minh City, has total investment capital of more than 200 million USD. Although FDI in the first quarter of this year fell sharply from the same period last year, Foreign Investment Business Association Deputy Chairman Nguyen Van Toan said that the decline did not reveal anything as businesses were busy making financial reports in the first quarter of the year and would really begin strong investment in the second quarter. FDI projects disbursed 2.85 billion USD in the first quarter of this year, a 5.6 percent increase from a year ago. Foreign businesses have invested in 15 areas in the country. Of these, the processing and manufacturing sector has received the largest amount of new and supplementary capital (2.332 billion USD) accounting for 69.9 percent of total FDI registered capital. International organisations also said that the Vietnamese investment environment had obviously improved and that foreign investors had increased their confidence in the Vietnamese investment environment. A recent report from the Japan External Trade Organisation (JETRO) indicated that 70 percent of Japanese businesses which were operating in Vietnam wanted to expand their production in the country compared with 66.2 percent in Thailand, 58.1 percent in the Philippines, 54.2 percent in China and 51.6 percent in Malaysia. Similarly, the European Chamber of Commerce’s 14th survey of European businesses in Vietnam, regarding the business competitiveness index (BCI) in the first quarter of this year, showed that European business confidence in the Vietnamese investment environment increased by nine points to 59 points against the last quarter of last year. The survey revealed that 78 percent of European businesses in Vietnam said that they would increase their capital in Vietnam in the near future. In this light, the sharp decline in FDI in the first quarter of this year does not mean that FDI in Vietnam would drop in 2014.- Foreigners interested in listed firms in Vietnam International investment funds and financial institutions expressed strong interest in Vietnamese listed enterprises introduced at the Invest ASEAN 2014 Conference in Singapore on April 1. Maybank Kim Eng under Maybank Group, the organizer of the two-day conference, said seven Vietnamese listed firms took part in the event. The companies are active in the fields of real estate, insurance, seaport, logistics, pharmaceutical and construction. The number of Vietnamese companies was fewer than those from Singapore, Thailand, the Philippines, Indonesia and Malaysia, but more foreign investors registered to meet the participating Vietnamese firms, indicating that Vietnam has drawn much attention from foreign investors. A representative of Bao Viet Holdings said over 30 investors and organizations had signed up for working sessions with the firm to sound out investment opportunities. They included France’s BNP Paribas, Japan’s Nomura Asset Management and JP Morgan Chase. Notably, investors paid attention to Vietnam’s real estate market despite the continued hardship experienced by the market. Nguyen Vinh Tran, general director of Nam Long Investment Joint Stock Company, said over 20 foreign companies and organizations wanted to meet Nam Long, including Fullerton Fund Management, Everest Capital Pte Ltd, Hansabay Pte Ltd, Nikko Asset Management Asia Ltd, NTAsset and Atlantis Investment Pte Ltd. Nam Long has participated in many similar international conferences but this event is different as investors there show strong interest in Nam Long. The reason may be that Nam Long successfully raised funds from six organizations and enterprises last year, including three foreign organizations – International Finance Corporation (IFC), Switf Current Offshore Ltd and Switf Current Partners L.T, Tran said. On the other hand, the local real estate market holds larger growth potential than in regional countries such as Thailand and the Philippines, especially in the housing segment for middle and low-income people. Joining the event is a preparatory step of Nam Long to raise capital for an urban development project in Long An Province, in which Nam Long has invested over VND1.2 trillion. The firm plans to develop the project this year with US$50 million estimated for the first phase, Tran added. Bui Thi Thu Huong, finance director of Gemadept Corporation, said the firm is seeking strategic partners because Vietnam has opened the door of the logistics industry to foreign investors. Gemedept is active in seaport, forestation and real estate sectors. At the conference, over 20 financial institutions and investment funds expressed interest in the company. Four other Vietnamese firms joining the conference were Cotec Construction, DHG Pharmaceutical, Hoang Anh Gia Lai and Vingroup. Investors and economic experts at the conference pointed out strong points of Vietnam such as a large market, a young labor force and a rising number of middle-income people. Ministry urged to speed up progress on 60W bulb ban Vietnamese Deputy Prime Minister Hoang Trung Hai has ordered the Ministry of Industry and Trade to evaluate the progress of implementing a government policy aimed at restricting and banning the use, importation, and manufacture of old-style 60-watt incandescent bulbs in the country apparently because it has been behind schedule. In 2011, Prime Minister Nguyen Tan Dung approved a list of electronic devices and appliances that should be labeled “energy consuming,” in his Directive No.51/2011 released on September 12. The directive was issued following a suggestion by the Ministry of Industry and Trade, which had proposed to enact measures to implement the law on economical and efficient energy consumption, according to news website Dan Tri. The 60-watt bulb was then included in the list and was expected to be completely banned by the end of last year, the newswire said, citing the fiat. But the plan has apparently failed to meet schedule, prompting the Deputy Prime Minister to ask the ministry to evaluate its implementation of the directive. “The ministry has to propose a roadmap to first limit, and later prohibit, the production and distribution of incandescent bulbs,” the deputy premier said in a statement released by the Government Office on Tuesday. Governments around the world have passed measures to phase out incandescent light bulbs for general lighting in favor of more energy-efficient lighting alternatives. Among them are Brazil, Venezuela, Switzerland, Australia, and the EU. Other countries are implementing new energy standards or have scheduled phase-outs, including Argentina, Russia, Canada, Mexico, Malaysia, and the Republic of Korea. A ban on incandescent light bulbs in the U.S. has also gone into effect as of the beginning of this year, leaving consumers with “pricier energy-efficient options that are expected to save people money over time,” the Los Angeles Times reported. Consumers can choose from several more energy-efficient options, including halogen, LED and CFL bulbs, which consume less energy compared with traditional incandescent ones and thus result in smaller utility bills, the newspaper said, citing experts. HSBC: Production improves for 7th straight month The HSBC Vietnam Manufacturing PMI rose to 51.3 in March compared to 51 in the previous month as a sign of improvement in overall business. The index pointed to a seventh consecutive monthly improvement in operating conditions in the manufacturing economy. In a report released on April 1, the bank said growth in the Vietnamese manufacturing sector regained momentum at the end of the first quarter of 2014. Both output and new orders increased at faster rates than the previous month and new export orders returned to growth. However, employment decreased for the first time since June 2013. Meanwhile, the rate of cost inflation slowed and firms lowered their selling prices marginally, the bank said in the report. Growth of new orders led manufacturing firms to increase production for the sixth month running. Moreover, the rate of expansion quickened from that in the previous month. Increased output requirements led manufacturers to raise their purchasing activity. Input buying grew for the seventh successive month and at a solid pace, which was only slightly weaker than the series record seen in January. Despite this, stocks of purchases continued to fall marginally as inputs were consumed in the production process, HSBC said. Employment at the Vietnamese manufacturing firms decreased in March, ending a seven-month sequence of job creation. But, the rate of job cuts was only slight. Panelists indicated that the main reason for the fall in staffing levels was that employees had left in order to find jobs elsewhere, the bank said. Meanwhile, the rate of input cost inflation slowed for the third consecutive month and was weaker than the series average. Although shortages of some raw materials had led suppliers to raise prices, falls in commodity prices in world markets had reportedly been behind slowing inflation. Despite the continued rise in input costs, manufacturers lowered their output prices marginally amid reports of strong competitive pressures. Trinh Nguyen, Asia economist at HSBC, said the rise of output for the manufacturing sector reflects Vietnam’s stellar performance in exports, especially to its regional counterparts where the slowing down of China has dampened demand. “We expect the manufacturing sector to continue to benefit from rising foreign investment into manufacturing, slowing input costs and improved Western demand,” she said. Suppliers’ delivery times were broadly unchanged. Where an improvement in vendor performance was recorded, this was linked to requests from firms for faster deliveries. On the other hand, material shortages had led to delays in some cases. New VAT rule makes life hard for business start-ups Newly-registered enterprises are struggling with a new rule on value added tax (VAT) as it requires them to have assets worth more than VND1 billion (US$47,440) to enjoy VAT deductions or else they will have to pay the full tax rate. They said the rule, which was issued by the Ministry of Finance in December last year and came into force on January 1 this year, will lead their products prices to climb and erode their competitiveness. The director of a wooden furniture firm specializing which was set up in January said the rule makes it hard for his company to sell products. He explained that if his firm cannot fulfill the requirement of having VND1 billion worth of assets, it will have to pay the full VAT for its inputs, which will result in its production costs surging. The tax will make business start-ups less competitive on both domestic and export markets than those enjoying a lower VAT, he said. Pham Ngoc Hung, vice chairman of the HCMC Union of Business Associations, told the Daily that many enterprises are asking the association for help to deal with the new VAT regulation. Hung said the new regulation on VAT of the Finance Ministry is unworkable since business start-ups in the services sector do not need huge investments. The requirement is not fit for processing enterprises as many of them do the outsourcing for their customers, he said. Although the new ministry’s new rule is designed to thwart the illegal trading of VAT receipts, Hung said, the tax authority should find ways to tackle those dishonest and fraudulent firms, instead of all enterprises. Foreign engineering firms keen to explore local market Foreign engineering companies have expressed their keen interest in expanding to Vietnam to capitalize on the bilateral and multilateral trade agreements to which Vietnam is and will be a signatory. Speaking at the opening on April 1 of the three-day International Precision Engineering, Machine Tools and Metalworking Exhibition and Conference (MTA) in Hanoi, Christian Braun, managing director of DMG Vietnam, said this German-Japanese joint venture had achieved annual growth of more than 20% over the last couple of years. He believes Vietnam’s engineering industry will develop as companies, particularly multinationals, need quality machines and equipment for their production. Switzerland-based Bystronic which specializes in laser and water jet cutting machines is also participating in the exhibition. Philip BC Loh, managing director of Bystronic for Asia, said the company posted impressive growth of 100% last year. The company has been in Vietnam for four years and now has representative offices in both Hanoi and HCMC. Loh said the company was considering building a factory in Vietnam in 2015, when the ASEAN Economic Community (AEC) is established. Loh added Vietnam would then serve as a key manufacturing base for the company to export its products to other markets in the bloc. Takahito Otsu of Mazak Vietnam said the company produces products for the automobile and molding industries and sees a lot of opportunities in the molding sector as many manufacturers are moving from Thailand and China to Vietnam, Laos and Myanmar. Japan-based Mazak has 72 branches globally. “So, the demand for precision engineering equipment is very high,” he said. Mazak now has factories in Japan and Singapore but labor cost in those nations is prohibitively high. Therefore, it has plans to open a factory in Vietnam to take advantage of the opportunities that might come from the AEC and the Trans-Pacific Partnership Agreement (TPP) which Vietnam is in talks with other nations. Sixteen companies from the Czech Republic are taking part in the MTA to look for partners in this market. Petr Zemanek, director of the Czech Association of Engineering Technology, said the nation’s new minister of industry and commerce encourages Czech companies to branch out to Vietnam and promised support for them. Companies of the Czech Republic have plans to use Vietnam as a springboard to penetrate the ASEAN market before the AEC is formed. Zemanek said the new minister of industry and commerce was expected to visit Vietnam next month. “We can provide equipment and technology for Vietnam’s engineering industry and Vietnamese partners,” he said. Realty firm wants clear guidance for social housing projects Local real estate developer Hoang Quan has listed a lack of guiding documents as one of the hindrances to investment and sales in social housing projects. The concern was raised by Truong Anh Tuan, chief executive officer of the HCMC-based corporation at a meeting on Monday with deputies of the National Assembly and representatives of the Ministry of Construction and the HCMC People’s Committee. Tuan said the ministry has yet to issue a circular guiding the implementation of Government Decree 188/2013/ND-CP that regulates the development and management of social housing projects in the nation. The decree, effective from January 10 this year, has replaced all the provisions on social housing development in Decree 71 which was issued in 2009. It also repeals a series of previously-issued decisions and policies regarding construction of houses for low-income earners in urban areas. This makes realty companies confused when they develop low-cost social housing. Tuan suggested the ministry soon issue guidelines on appendixes and forms which the authorities can use to confirm the home ownership state of those eligible to benefit from social housing projects. Tuan said 300 customers have signed up for buying apartments of HQC Plaza, a social housing project that the corporation is developing on Nguyen Van Linh Parkway in HCMC’s Binh Chanh District. HQC Plaza, which broke ground in November last year, has 1,735 apartments of 54 to 70 square meters each and its buyers will be able to take delivery by the third quarter of next year. A loan of VND540 billion from the Government’s VND30-trillion home loan program has been approved for Hoang Quan and VND186 billion of which has been disbursed for this corporation. The low-interest lending program was launched in June last year to help the property market and participating banks in HCMC had disbursed around VND300 billion by mid-March. Corporate and individual investors can enjoy an annual interest rate of 5%, much lower than the commercial rates applied by banks. By then, 584 applicants had registered to benefit from the program but disbursement had been slow due to complicated procedures, especially for corporate borrowers. Nguyen Viet Manh, director of the State Bank of Vietnam’s Credit Department, explained most enterprises had yet to start construction, so they had no demand for capital. He added banks were still considering credit applications of many businesses. Policies fish for fresh cash sources The state will renew policies related to domestic and foreign investment in the local fishery industry because of inefficiency in attracting investment to the industry at present. This was stated by officials of the Ministry of Agriculture and Rural Development (MARD). According to the MARD, by the end of 2013, Viet Nam had 70 foreign direct investment (FDI) projects in the fishery industry with a total registered figure of a modest US$300 million. The domestic private investment in the industry also stood at low level. Chu Tien Vinh, former deputy director of Fisheries Department under the MARD, said high risk and unattractive investment incentives had made domestic and foreign investors shy away from investing in the local fishery industry, reported Dau tu (Investment Review) newspaper. Investors had made minor investments in the seafood trade segment and in feed for the industry, while the industry had mainly state investment, he said. However, the state investment in the industry had also not met the industry's demand, he added. During the period of 2006-10, the investment to the fishery industry accounted for 3 per cent of the total investment in the agricultural sector. The MARD has increased the investment to 7 per cent for the period 2011-15 but it is still low. The MARD expects to increase the investment in fisheries to 10 per cent of the total investment in the agricultural sector for the period of 2016-20. Nguyen Thi Hong, head of the MARD's Planning Department, said in the future the structure of investment to the fishery industry would be restructured in the direction of cutting investment from the state budget and increasing investment from preferential credit, policies on calling private and FDI capital, and public-private partnership (PPP) projects. The department has cooperated with large foreign corporations, including Metro Cash and Carry Viet Nam, Cargill and Fresh Studio, for implementing PPP projects in the fishery industry and has gained positive results. Deputy Minister of agriculture and rural development Vu Van Tam said the ministry would review plans of fish ports across the nation to adjust and add investment policies for submitting to the Prime Minister in the coming time. The ministry would also act as an advisor to the government and provinces to set up specific plans for developing large fish centres in Hai Phong, Da Nang, Khanh Hoa and Ba Ria-Vung Tau and attracting investment to the centres, he said. Such centres are also being planned in Kien Giang and Can Tho. Meanwhile, the fishery industry will also change structure of investment to give priority in capital for infrastructure, logistics service, large regions of developing fisheries and fisheries varieties of the industry. The industry will focus on intensive production, application of hi-tech for it and cooperation in production and business. Do Thu Trang, from general research division under the Planning and Investment's Development Strategic Institute, said the provinces with a developed fishery industry should have long-term plans to attract investment to the industry and cooperate in promoting investment among regions. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR