BUSINESS IN BRIEF 2/5 Soc Trang province urged to focus on agro-aquaculture A senior Party official has recommended that the southern province of Soc Trang to focus on developing agriculture and aquaculture which are the advantages of the province. At a working session on April 28 with Soc Trang provincial Party Committee’s Standing Board, Le Hong Anh, Politburo member and standing member of the Party Central Committee Secretariat, hailed the achievements that the Party organisation, authorities and people in the province have made in socio-economic development. However, Anh said the results are not sustainable, with potential instability in the local socio-economic, security and political situation. He added that the poor attraction of investment and a high rate of poverty are issues that Soc Trang needs to deal with immediately. The Party official also requested that the local authorities pay more attention to religious and ethnic issues, taking better care of social welfare and improving people’s living standards, particularly poor ethnic people in remote areas. Le Thanh Quan, Standing Vice Secretary of the provincial Party Committee’s Standing Board briefed the Politburo member on the overall situation in Soc Trang in the first quarter of this year. He highlighted a 36 percent year-on-year increase in total aquatic output and a 16 percent rise in industrial production value. The province earned 127.3 million USD from aquatic product export in the period, a more than double hike from the same period last year. Soc Trang has also improved its ranking in the Provincial Competitiveness Index by 21 places. Quan also reported that the province is making efforts to carry out the Party Central Committee’s Resolution on Party building and the revised Constitution, as well as to popularise State and Party’s policies to all the people. Hanoi’s exports enjoy surge in first four months Hanoi earned some 3.44 billion USD from its exports in the first four months of this year, up 11.6 percent from the same period last year. In April alone, the figure stood at 883 million USD, up 9.9 percent compared to a year ago. Garments topped the city’s key exports with a surge of 34.6 percent, followed by glass and glass products (34.2 percent), and others (23.9 percent). Meanwhile, the export of agricultural products and computer components and peripheral equipment saw drops of 25.3 percent and 23.1 percent respectively. Can Tho plots foreign investment future The southern city of Can Tho should foster investment to develop its key fields in a comprehensive manner, especially manufacturing mechanics that would give a boost to the processing and production of agricultural and aquatic products. Vice Chairman of the municipal People’s Committee Vo Thanh Thong made the remarks at a April 29 conference designed to further promote investment inflow in the city. He added that Can Tho needs to attach importance to building high-tech agricultural and aquatic parks, as the two fields play a key role in the development of the city and the Mekong Delta at large. The event enabled local enterprises and those from the Republic of Korea (RoK) to seek cooperation opportunities and helped attract Korean investment in food production and export, he added. At the workshop, the local authorities introduced their incentive policies for foreign organisations to representatives from RoK firms. They also talked about areas in need of foreign funding and called for investment in industrial and high-tech parks, Tan Loc eco-tourism area and transport projects. Participating delegates were also briefed about the Vietnam-RoK industrial technology incubator project that started in the city at the end of 2013. The 21.13-million USD project, paid for by the RoK side through non-refundable assistance, aims to step up research and development of the city’s major industries, including agricultural and aquatic product processing and agriculture-served mechanics. Once finished, the project will support businesses based in Can Tho and the Mekong Delta to innovate their existing technologies and access better ones as well as increase the quality of products and their operational effectiveness. NA Economic Committee convenes in Quang Ninh The National Assembly’s Economic Committee convened its tenth plenary meeting in the northern province of Quang Ninh on April 29, focusing on assessing socio-economic development in 2013 and fostering the implementation of the 2014 plan. According to Deputy Minister of Planning and Investment Dao Quang Thu, last year the country was able to fulfil 10 out of a total of 15 major targets set by the National Assembly and almost met three targets while failing to achieve two. He affirmed that the macro economy has been gradually stabilized and inflation was put under control. The country’s GDP growth rate stood at 5.42 percent, while inflation decreased to the lowest level in the past 10 years and the investment for development totaled 1,091 trillion VND (51.2 billion USD). During the 2011-2013 period, 180 State-owned enterprises were restructured, and citizens enjoyed continuous improvement to their living conditions, Thu said. However, he pointed out several shortcomings, including low competitiveness, high State budget overspending and unsustainable poverty reduction progress. Thu said that this year the government is continuing to stabilise its macro economy, curb inflation, raise the competitiveness of the economy and ensure social welfare. During the meeting, participants focused their attention on issues related to public debt, wasted investment and difficulties faced by domestic businesses. They also stressed the need to restructure agriculture towards modernisation. Market must tackle mid-, long-term credit: expert Vietnam's capital market should be developed to handle the mid- and long-term credit demand of the economy, and leave the management of short-term credit and financial services to the banking system. The suggestion put forward by bankers and economists is aimed at taking the pressure off balance sheets and volatile capital structures at banks that use short-term deposits to do mid- and long-term lending. Vietnam's financial market has developed exponentially, yet the development is largely dependent on bank credit, Nguyen Thi Kim Thanh, head of the central bank's Banking Strategy Institute, was quoted as saying by Thoi Bao Kinh Te Viet Nam (Vietnam Economic Times). Domestic outstanding loans are equivalent to 104.9 percent of the GDP, which is 6.5 times higher than the total value of the bond market and triples the capitalisation value of the stock market. The country’s GDP stood at 170 billion USD in 2013 and 141 billion USD in 2012. The State Bank of Vietnam's statistics revealed that mid- and long-term money constituted 30-35 percent of the total deposits, but mid- and long-term credit accounted for more than 40 percent of the total demand. BIDV Chairman Tran Bac Ha was quoted by the newspaper as saying that banks take liquidity risks by using short-term deposits to facilitate mid- and long-term loans. This practice causes pressure on the central bank to re-finance or provide additional capital to banks via Open Market Operation (OMO) at more frequent intervals by the year-end period. While banks' sources fall short of credit demand, the capital market is not adequately developed and in need of urgent assistance. Government bonds, which constitute 90 percent of the bond market, including State Treasury bonds and notes, Government-guaranteed bonds, local authority guaranteed bonds, only manage to meet 16 percent of the credit demand. Moreover, these tools are almost held as safe reserves by major credit institutions, such as BIDV, Vietcombank, Agribank, and Vietinbank until they mature. Credit that banks injected into government bonds reportedly reached 65 trillion VND (3 billion USD), up 0.1 percent by the end of the first quarter this year as compared to the end of 2013. After bond sales, however, mobilised money often makes a round trip within the state treasury and banks that also bore fees. Ha suggested that the State and Government should chalk out plans to use capital mobilised from bond sales, such as public investment projects. Tran Hoang Ngan, a member of the National Advisory Council on Monetary and Financial Policies, emphasised that it is not just necessary to fix regulations for the stock market, but also pay more attention to revive the government bond market. Ngan proposed sellers to diversify maturities and to make pre-sale information available to the public in order to help investors to be better prepared. Post-sale policies are also required to boost transactions in the secondary market. In the meantime, the corporate bond market recorded a good performance last year, and Vietnam is aiming higher by organising its technical and legal grounds in order to be well-prepared to facilitate issuers. Vietnam's corporate bond market featured the participation of 20 issuers, but just one-fourth are active in the market. The Ministry of Finance plans to mobilise up to 35 trillion VND (1.65 billion USD) from corporate bonds this year, up 1.8 percent against 2013. Last year, the volume of corporate bonds sold was 34.41 trillion VND (1.62 billion USD), up 19.87 percent against 2012, 37.64 percent against 2011, and 14.7 percent against 2010. Singaporean investors invited to Phu Quoc Minister of Planning and Investment Bui Quang Vinh has called on Singapore businesspeople to invest in Phu Quoc, an island planned to be a hi-end tourism and sci-tech centre in Vietnam and the larger Southeast Asian region. At a forum promoting investment in Vietnam in Singapore on April 28, Vinh revealed that the Prime Ministers of Vietnam and Singapore have agreed to do everything to facilitate operation of Singaporean investors in Phu Quoc, which is part of southern Kien Giang province. He expressed his wish that Singapore, with its expertise in resort planning and development, will help with the planning, preferential policies and anticipated procedural bottlenecks. Joining the forum, Vice Secretary of the Kien Giang provincial Party Committee Nguyen Thanh Nghi unveiled that the Government is working on the development of the Phu Quoc island special economic zone, where the best-known preferences will be applied for investors for the first time. Singaporean firms could engage in eco-tourism and scientific urban areas and hi-tech industrial zones covering about 4,000 hectares in Phu Quoc, he suggested. At working sessions with some Singaporean companies later the same day, Kien Giang officials made it clear that preferential treatments relating to land, corporate tax, income tax for high-income earners and import tariff will be in place for investors. According to Chia Tech Keng, a representative from Arcanum Associates LLT, a provider of investment and business consultancy services, Phu Quoc boasts great opportunities. “I would recommend people to come to Phu Quoc very quickly,” he said. Sharing views with Chia, Tan Soon Kim, Assistant Chief CEO of IE Singapore, said his agency will advise Singaporean businesses to take a look into Kien Giang. The Kien Giang delegation is scheduled to deliver a speech introducing the province’s potentials to Singaporean investors at the 10th Vietnam-Singapore Ministerial Meeting on Economic Connectivity to be held in the city-state on April 29. WB Group member aids financial access in Vietnam The International Finance Corporation (IFC) of the World Bank Group on April 28 said it will work with a Vietnamese partner to better micro-enterprises’ access to finance services. Under a recently signed agreement, IFC will help the Vietnam’s Microfinance Institution Limited (M7) extend its financial advisory services to small- and micro-enterprises, which are in need of money to expand their operations, raise incomes and create more jobs. M7 General Director Nguyen Duc Binh said the partnership with IFC will help the institution improve its capacity and provide more services to clients. Rachel Freeman, IFC manager for Access to Finance Advisory Services in East Asia and the Pacific, said Vietnam’s microfinance sector is in a transitional period when a number of local microfinance organisations becoming official institutions and integrating into the financial system. As of February 2014, M7 gave 4.7 million USD in loans to individuals and miro-enterprises. Tien Giang calls for investment to 24 projects The Mekong Delta province of Tien Giang is calling for investment to 24 projects in the locality worth a total value of 45 trillion VND (2.1 billion USD). They include a 275-hectare seaport and logistics project worth 31.5 trillion VND (1.48 billion USD), a 110-million-USD Tien Giang hospital project and a planned waste water treatment system in the province’s My Tho city. Speaking at an investment promotion seminar on April 28, Chairman of the provincial People’s Committee Nguyen Van Khang said that Tien Giang pledges to support businesses in land clearance, basic infrastructure, and vocational training. The province will also create a healthy investment environment for both domestic and foreign companies, Khang said. At the seminar, he also introduced participants to the province’s potential. Representatives from local departments also answered investors’ queries on issues related to investment procedures. On this occasion, the province granted investment licenses to eight new investors with a combined capital of over 3 trillion VND (141 million USD). Institutional reform needed to kick-start development Institutional reform was emphasised as the driving force of development at the 2014 Spring Economic Forum held in the northern province of Quang Ninh on April 28. Economic specialists at the forum reviewed the country’s financial situation and the implementation of macroeconomic policies last year, before offering advice for the next 12 months. Participants joined discussions on financial trends, the economic outlook for the country and the potential influence of global markets on Vietnam in 2014. They also talked about challenges facing fiscal and monetary policies and measures to enhance the country’s international globalisation. Although the 2013 GDP growth target was missed, the economy still saw signs of recovery, said Nguyen Van Giau, head of the National Assembly’s Economic Committee (NAEC). He noted that last year’s production rebounded while inflation was curbed and foreign currency reserves increased sharply. To reach this year’s economic goals, Vietnam needs to tackle difficulties facing domestic enterprises and help those with non-performing loans (NPLs) boost their production, experts suggested, adding that bolstering economic reforms and developing economic zones are essential. Speakers at the event also said that a greater awareness of the role by the State economic sector must be promoted. They said this would allow prices to be managed in line with the market mechanism, and facilitate the sustainable development of the property market. The forum was co-organised by the NAEC, the Vietnam Academy of Social Sciences, the Vietnam Chamber of Commerce and Industry, and the United Nations Development Programme (UNDP).- Negatives behind impressive numbers in FDI sector Foreign Direct Investment (FDI) has much contributed in the country Gross Domestic Products (GDP) but there are several problems, said experts. According to the country statistics, FDI capital has kept increasing over the last few years. The highest number was recorded in 2008 when registered capital reached US$72 billion. US$10 billion has been spent on FDI projects per year for the last four years, accounting for 25 percent of social investment capital. FDI businesses contribute 20 percent of the country GDP. The sector’s export turnover accounts for 70 percent of the country total. They have directly provided two million jobs and indirectly created 3-4 million jobs. However, several experts have expressed doubtfulness about real benefits that the country enjoys from FDI. Gross National Product has not increased in accordance with GDP growth, meaning FDI enterprises have transferred much their profit abroad, according to an official from the Planning and Investment Ministry. Similarly, FDI export turnover is very high but its value added is not. The official believes that FDI enterprises in Vietnam are taking advantage of human and natural resources. About 70-75 percent of technologies taken into Vietnam is appraised of average and below average levels, according to a study made by expert Bui Trinh. 15 percent is nearly outdated and only 5 percent is advanced. Most FDI companies have not paid business income tax for the last several years, said associate Professor Truong Quang Thong from the University of Economics Ho Chi Minh City. The General Department of Taxation under the Ministry of Finance inspected and uncovered hundreds of FDI businesses performing transfer pricing or evading taxes last year. Of them, the South Korean Keangnam – Vina Company had to pay VND95.2 billion of tax arrears. Mandatory regulation considered to consume gasoline E5 The Government should consider issuing a mandatory regulation for consumption of gasoline E5 with ethanol because consumers prefer conventional petrol to the blend, said Dang Vinh Sang, Saigon Petrol Director General. The Saigon Petrol One Member Limited Company is one of the pioneers for the distribution of the blend. Consumption of gasoline E5 is meeting with difficulties because consumers are unaware of its benefits and in their habit of using traditional fuels like Ron 92 and Ron 95, he said. Sang proposed another solution which the Government subsidy the gasoline E5 and E10 to encourage consumption. The subsidization should be able to make the E5 price lower than that of conventional fuel. At present, their prices are same.  Vietnamese Businesses receive Prior Policies from Russia Conference of introducing and supporting Vietnamese products in Russia will be held on May 16. It is aimed at encourage Vietnamese businesses to export their products to Russian market. Incentra –Investor of Ha Noi-Maxtcava Hotel & Commerce, Culture Center said Vietnamese businesses exporting products to Russian market will receive priority policies including supporting transport service from Vietnam to Russia and introducing Russian potential partners. Cargo handled through Da Nang Port increases The Da Nang Port in central Da Nang city handled about 1.3 million tonnes of cargo, including 47,000 TEU on container ships, in the first quarter of this year, a 37.6 percent rise compared with the same period last year, a local newspaper reported. Last year, the total volume of cargo transported through the port reached 5 million tonnes, the highest ever recorded in the city, Da Nang Today added. In an effort to encourage local shipping companies and businesses to shift freight transport from road to sea, four domestic sea transport routes between Da Nang, Sai Gon and Hai Phong ports have been opened. T his has helped facilitate enterprises in Da Nang, as well as in the central region and highlands, to access low-cost freight transport services. According to calculations by local businesses, the cost of transporting goods by sea will be less than 30 percent of that on road. As a result, 90 percent of big businesses in the city and the central region and highlands have so far transported their cargo by sea instead of by road. The Da Nang Port is targeting to handle 5.5 million tonnes of cargo by the end of the year, and the target is quite feasible. However, Da Nang Port General Director Nguyen Thu said that the port is facing an overload of container ships, with the port’s container handling wharves kept very busy. In addition, an area of the port is designated for receiving cruise ships, which causes an increase in the overload. As a result , the Da Nang Port is now in need of expansion and more wharves. It is hoped that the implementation of the Tien Sa Port expansion project over the 2011 - 2017 period will be completed on schedule in order to meet the increasing demand of customers. Lack of entrepreneurial spirit in Vietnam Vietnamese people have a low level of awareness of business opportunities, according to a new report from the Vietnam Chamber of Commerce and Industry (VCCI). The VCCI pointed out a number of weaknesses on the Global Entrepreneurship Monitor Vietnam Report 2013. Even though more and more people want to go into business, only 37% of adults are aware of new businesses opportunities and just about 47% have an accurate notion of their own abilities to do business. The average in other countries are 61% and 69% respectively. "This could be a consequence of the economic recession," said Luong Minh Huan from VCCI. The report also pointed out that Vietnam still does not have proper economic education in primary through high school. The system focuses on teaching reading, writing and maths while ignoring soft skills. Only three statistics in the report on business conditions in Vietnam were above average: infrastructure, market dynamics and cultural and social standards. Nine other areas showed weakness, including consultancy, auditing and accounting, pointing to the need for legal and other business support services in Vietnam. According to the report, in order to boost entrepreneurs' confidence, Vietnam should maintain stability in the macroeconomy, ensure transparency in policy and create conditions for fair competition in all sectors. Hanoi’s largest safe food production chain A safe food production chain with an expected capacity of 20,500 tonnes per year was launched in Hanoi this morning, April 25. Amid rising concerns over food safety, six enterprises operating in animal feed, poultry breeding, animal husbandry, slaughtering and pork and chicken processing partnered up to establish a safe food production chain called Green Food Hanoi. Green Food Hanoi, created with the support of the Hanoi Farming Development Centre, is the largest partnership of its kind the capital city. The chain plans to admit member farms in Hanoi, including 150 pig farms with a combined 7,500 sows and 82,000 porkers as well as 50 chicken farms with a combined 250,000 chickens. The chain expects to produce 8,250 tonnes of pork, 1,160 tonnes of chickens and 900,000 eggs per year. They also plan to set up 20 to 30 food stores citywide as well as supply food for between 100 and 120 office, school and hospital cafeterias. To date, Green Food Hanoi has surveyed 105 farms and admitted 83 farms as members. They have also opened five food stores in Ha Dong, Dong Da, Hai Ba Trung, Tay Ho and Thanh Xuan districts. A representative from Green Food Hanoi said they pledge to only sell fresh meat that was produced the same day. This could be an advantage once the Trans-Pacific Strategic Economic Partnership Agreement takes effect in Vietnam. The agreement will allow large volumes of frozen meat into the country. Nguyen Xuan Duong, Deputy Director of the Ministry of Agriculture and Rural Development’s Animal Husbandry Department, said that the establishment of a safe food production chain is a benefit for consumers, who will be better able to track the origins of the products they eat. “Safe production chains not only help consumers get access to safe food, but provide small-scale animal farms a chance to join an association and learn how to make better quality products. Profits are fairly divided among all stakeholders, including farmers,” he commented. Thanh Tam, a consumer from Hanoi’s Thanh Xuan District, said, “I’m happy to know that this kind of thing exists in Hanoi because I'm concerned about food safety." 18,000 new businesses established in Q1 As many as 224,200 new businesses have been set up in 2011-2013, accounting for nearly 41% of total newly-established businesses in 1991-2010. The Report on the performance of businessess was released at the Conference with businessess, Ha Noi, April 28, 2014 - Photo: VGP/Nhat Bac The figures were part of a Report on the performance of businesses and the nation’s socio-economic development in 2014-2015. In the first quarter of 2014, more than 18,000 businesses registered for establishment, capitalizing at nearly VND98,000 billion, up 17% in the number of businesses and 23% in the registered capital compared to the same period last year. However, nearly 17,000 enterprises are facing difficulties or ceasing operation, up 9.6%. Regarding labor force, the private sector demonstrates as the main force, accounting for 96% of total businesses operating in 2010-2012. On Gross Domestic Products (GDP) density, the private sector remains the lead, making up 48-49% of total GDP in 2009-2012. The contribution of the State-owned Enterprises (SOEs) to the GDP tends to decrease on the back of the Government’s privatization process, from 37.72% in 2009 to 32.57% in 2012. The Foreign Direct Investment (FDI) businesses' contribution to the GDP is kept stable, at 17-18% in 2009-2012. The report also pointed out orientations and solutions to business development in the future such as the improvement of business environment and acceleration of the roadmap and issuance of the Law on Investment (amended) and Law on Enterprises (amended). Purchasing power drops back Consumer spending touched VND939.6 trillion (US$44 billion ) in the first four months of the year, posting a 10.5 per cent year-on-year increase, the General Statistics Office (GSO) announced yesterday. In April, the consumer spending rose a low 2.4 per cent over the previous month and 11.2 per cent year over year. The increase, excluding the price factor, was 5.5 per cent year over year. However, the real purchasing power in the period was similar to the corresponding period last year. The Consumer Price Index (CPI) in the January-April period was 0.88 per cent. This has been also the lowest consumer spending level since the second quarter of 2011. GSO economist Vu Manh Ha said the 5.5 per cent rise was calculated by taking into account the expected high consumer spending during the upcoming holidays. The service tourism sector posted a 25.6 per cent increase, while the other sectors rose 24.4 per cent. Ha said the purchasing power has been on the decline in the four-month period. The consumer spending rate in the first months of the year was 7.2 per cent, falling to 6.2 per cent in the first two months and 6 per cent in the first three months. The total spending of the private sector, which accounted for 86 per cent of the total, rose 10 per cent in the period, while it was 14 per cent in the first quarter of the year. He added that this was because most of supermarkets and shops in the cities reported a low turnover. In addition, the inventory index in industrial production was high at 14 per cent during the four months, higher than 13.4 per cent of the previous month. Japan firms shown path to credit The Japan Finance Corporation organised a conference in HCM City to apprise small and medium-sized Japanese enterprises about its letters of credit that enable firms to borrow locally and become financially independent of their parent companies. Sachiko Hayakawa, managing director of JFC, said her corporation has 47,000 small and medium-sized enterprises as customers in Japan of whom more than 6,000 have overseas subsidiaries, 315 of them in Viet Nam. It has in recent years been issuing stand-by letters of credit (SBLC) to guarantee Japanese SMEs' loans from local banks in seven countries – Viet Nam, Thailand, the Philippines, South Korea, Singapore, Indonesia, and Malaysia. VietinBank is the only lender in Viet Nam to be selected as a partner, she said. The bank is establishing a Japan desk and offering preferential interest rates for JFC's customers, she added. Nguyen Tran Kien, a Vietinbank executive, said Japanese SMEs in Viet Nam introduced and guaranteed by JFC's LCs could get loans of up to VND110 billion (US$5.24 million) in dong or US dollars for buying equipment or long-term funding. Another Vietinbank executive said the common problems of Japanese subsidiaries in Viet Nam include the inability to predict exchange-rate fluctuations and the resultant losses and to borrow from local banks. But their parent companies in Japan urge them to manage independently, she said. Tomohiko Sato, managing director of Sato Sangyo Vietnam Co. Ltd, a company making household appliances in Binh Duong Province, said SBLCs could help his company become independent of its parent company. Many Japanese SMEs in Viet Nam are profitable. According to a survey by the JFC, almost 52 per cent made profits last year and 11 per cent broke even. The conference also discussed how Japanese SMEs in Viet Nam can reduce employee turnover and have a stable workforce. Le Long Son, director of Esuhai Co.Ltd – which offers training and job consultancy for Japanese SMEs – said Vietnamese tend to "leave the heart at home and bring only their head to work" in reference to the importance of family. Firms need to bring "company" and "work" into worker's consciousness to change things, he said. Most workers are unhappy to travel long distances to work and tend to keep switching jobs until 26, and the firms can only attract and keep good workers by paying high salaries and offering good career prospects, he said. Besides, personnel should be recruited and trained only at 26-27, he added. The conference was jointly organised by the VietinBank and the Japan External Trade Organisation. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR