BUSINESS IN BRIEF 8/5 Toyota to recall 43,000 cars in Vietnam Toyota Motor Vietnam has announced a recall of Innova, Fortuner, and Hilux cars from May 15 to test and replace the spiral cable system.                             The Japanese carmaker will recall 40,000 Innovas, 2,531 Fortuners, and 265 Hiluxs. The driver’s airbag module is attached to a spiral cable assembly with electrical connections that could become damaged when the steering wheel is turned, it explained on its website. If this occurs, the air bag warning lamp will illuminate, the driver’s airbag could become deactivated, causing it to not deploy in the event of a crash. Cashew exports to reach $2.2b in 2014 The turnover for the cashew sector is likely to be US$2.2 billion this year from exporting 180,000 tonnes of cashew nuts, shipments of nut shell oil and other processed products. The Viet Nam Cashew Association (Vinacas) forecast was included in a report from the Ministry of Agriculture and Rural Development, which showed that cashew nut exports had reached an estimated 20,000 tonnes in April, earning the country $132 million. The latest figure brought the total cashew nut export volume up 15 per cent to 73,000 tonnes in the first four months, with sales of $456 million, up 16 per cent in value, over the same period last year. According to the report, the export price of cashew nuts stood at $6,182 per tonne during the period, 1.8 per cent higher than last year's corresponding period. The United States, China and the Netherlands remained the three largest export markets for Vietnamese cashew nuts, making up 28.5 per cent, 20.01 per cent and 9.1 per cent, respectively, of Viet Nam's export value. Vinacas recently unveiled a Viet Nam cashew value programme that targeted raising the value of exports, promoting consumption both in the domestic and foreign markets, and building brands for the country's cashew products. For the programme, which will be implemented from this year through 2020, the association will co-operate with the HCM City Nutrition Centre to research and assess the nutritional benefits of cashew. It will collaborate with the Global Cashew Council and its nutritional research programme to promote the nutritional aspects of Vietnamese cashew globally. The VND20 billion ($947,000) programme will build national cashew brands; register a trademark to protect Vietnamese cashew products in key markets such as the United States, China, and the European Union; and develop new products that are suitable for local tastes. Banks cut deposit interest rates as credit growth lags Banks have continued to slash deposit interest rates amidst good liquidity and slow credit growth. According to the latest mobilising rates at ACB, one- to two-month deposit rates have dropped to only 5.5 per cent yearly, down to 0.4 per cent compared to the previous rate. The three-month rate fell to 5.6 per cent yearly compared to 6 per cent earlier. The interest rates of long-term deposits also fell sharply. The six-month rate fell from 6.55 per cent yearly to 6.1 per cent; the nine-month rate fell from 6.6 per cent yearly to 6.3 per cent; and the 12-month rate fell from 7.7 per cent to 6.9 per cent. Sacombank also cut deposit interest rates slightly. The seven- to eight-month rates fell from 6.55 per cent yearly to 6.4 per cent; the nine-month rate fell from 6.7 per cent yearly to 6.5 per cent; and the 11-month rate fell from 6.8 per cent yearly to 6.7 per cent. According to the banks, as the competition for lending among banks is now fierce, a further reduction in deposit interest rates is intended to cut costs for more attractive lending rates. Data from the central bank revealed that deposits rose 3.09 per cent by April 20, while credit growth was only 0.62 per cent, much lower than 2.11 per cent of the same period last year. In the interbank market, interest rates have also continued to slide for short-term deposits. The overnight rate yesterday stood at 1.65 per cent yearly, down to 0.15 percentage points against last week. One-week term rate also declined 0.15 percentage points to 1.9 per cent yearly. The declining rate for two-week terms was 0.3 percentage points. Industry insiders forecast that interest rates will continually reduce soon as there are no optimistic signs for the abundant deposits at banks. Heightened costs cut into Vinamilk profits First-quarter net profit for dairy giant Vinamilk (VNM) came in 9.4 per cent lower than the same period last year, at more than VND1.387 trillion (US$65.7 million). In a recent submission to the HCM City Stock Exchange, Vinamilk attributed the fall to rising the cost of promotion and advertising campaigns, and a jump in raw material costs. Total expenses climbed 44.3 per cent over the previous period, reaching more than VND821 billion ($39 million), of which money paid for advertising campaigns accounted for nearly VND286.5 billion ($13.6 million). Wage costs also soared 258 per cent to VND113.3 billion ($5.4 million) from nearly VND44 billion ($2.1 million) recorded previously. Meanwhile, raw material costs increased 8 per cent to VND14.3 billion ($677,700). Net revenue amounted to VND7.678 trillion ($363.9 million), up 15 per cent over the same period last year. However, the rising cost drove the price to sales ratio up 3 per cent to 66.6 per cent. The results equated to an earnings per share of VND1,665 per share in the first quarter. Between January-March, Vinamilk paid VND1.6 trillion ($75.8 million) for lending and acquiring debt instruments from other companies. The company's short-term deposits grew from VND3.6 trillion ($170.6 million) to VND5.2 trillion ($246.4 million). Seafood exports to the US on the increase Viet Nam exported 22 per cent of its total seafood market to the US in the first quarter of 2014, states the Ministry of Industry and Trade's department of import and export. The export turnover in this market in 2013 reached US$1.52 billion, up 27.4 per cent over 2012. In January 2014, exports achieved $155.63 million, an increase of 87.8 per cent over the same period last year. The US took the lead in importing shrimp, pangasius, tuna and crab. In the first quarter of 2014, the main export seafood to the US increased. Shrimp and pangasius, (accounted for 80 per cent of total seafood exports), had the strongest growth (shrimp up 163 per cent, pangasius up 44.6 per cent). Of the three main seafood export markets, including the US, EU, and Japan, exports to the US achieved the highest level in 2013 and at the beginning of 2014. Maybank Kim Eng doubles its charter capital Maybank Kim Eng Securities Limited Company announced yesterday that it had doubled its charter capital from VND300 billion (US$14.2 million) to VND615 billion ($29.14 million). This is the second time that the company has raised its charter capital since it began operations in Viet Nam in April 2008. In addition to becoming in January the first securities firm in Viet Nam that is 100 per cent foreign owned, the increase in charter capital is an important step for the company to achieve its vision of becoming the leading securities company in Viet Nam as well as a regional financial powerhouse, the company says. New circular seeks to prevent car trade fraud Minister of Public Security Tran Dai Quang signed a new circular to tighten regulations on vehicle registration, with stricter rules for the transfer of Vietnamese overseas vehicles. According to Circular No 15, effective June 1, any overseas Vietnamese' (Viet kieu) vehicle returning to the Viet Nam port from April 1, 2014, can only be transferred to another owner if it is registered with fully paid tax and the fee imposed on the Viet kieu under the current regulations. Earlier this year, the Ministry of Finance (MoF) regulated that Viet kieu can have their cars imported as their assets without paying import duty but with only special consumption and value-added taxes and a vehicle registration fee. This way, the MoF allowed each Viet kieu to have one car and one motorcycle in Viet Nam. However, local authorities discovered that trade fraud of expensive cars have been committed by borrowing Viet kieu names and posing as owners of luxury vehicles from abroad to skirt legal loopholes, reported the local media. The General Department of Viet Nam Customs also saw a sudden, sharp increase in the number of luxury cars imported to Viet Nam as Viet kieu assets. It calculated 1,200 cars registered as Viet kieu assets returning to Viet Nam in 2012, while the number was less than 200 from 2009 to 2011. Dien dan doanh nghiep newspaper said that the sudden increase came after Viet Nam only allowed authorised car distributors to import new cars for sale in the country in 2011. The newspaper also said by the end of this February, there were more than 100 luxury cars registered as Viet kieu assets seized at the locals ports. Since early this year, HCM City Customs Office has re-exported 75 Viet kieu's cars due to administrative violations. Banks target growth in consumer lending Banks plan to explore mergers or acquisition of financial institutions, as well as the establishment of new financial companies, to ensure a healthier bottom line by offering more consumer loans. At recent shareholders meetings, at least three banks, Saigon–Ha Noi Commercial Joint Stock Bank (SHB), Maritime Bank and Vietcombank, have asked shareholders to support plans to acquire or set up financial companies. At its shareholders meeting last month, SHB's board of directors sought approval to merge with and restructure a financial company that would become the bank's affiliate and provide consumer loans. Bank directors said such a move would add value to SHB's operations. The Maritime Bank has also asked its shareholders to authorise the establishment or acquisition of a financial company that would specialise in developing consumer loans. Similarly, Vietcombank has asked its shareholders to approve a plan to set up a consumer credit company. Nghiem Xuan Thanh, general director of Vietcombank, said the retail banking market had much room to grow, but wholesale banking was not expected to develop as once predicted. As most consumer loans are a small amount, they help banks disperse risks, he said. Late last year, HDBank acquired Societe Generale Viet Finance (SGVF) and renamed it HDFinance. Nguyen Huu Dang, general director of HDBank, said before purchasing the financial company, consumer lending had not been effective for the bank because of high costs. Consumer loans are generally small, but they must also comply with the strict loan approval process at the bank. After HDBank acquires a financial company, small loans below VND30 million (US$1,420) are then transferred to HDFinance. HDFinance, which has modern management technology, can approve the loan in 30 minutes to an hour, which is much faster than the time needed for bank approval. Banks prefer to restructure existing financial companies instead of establishing new ones as these companies have market experience, and, thus, risks are lower, Dang said. According to economist Nguyen Tri Hieu, capital mobilisation at banks has been good, but they have faced difficulties in lending. As a result, they need to focus more on personal loans, either through acquisition or establishment of financial companies or consumer credit companies. Because financial companies are not required to comply with strict regulations, they can do business more easily than banks, which find it hard to thrive in the consumer loan market. In addition, the income of Vietnamese loan applicants is sometimes hard to prove, as required by bank rules. The banks' establishment of finance companies can help bring greater profits because of the higher interest rates on consumer loans, he said. Although they pay a higher interest rate, borrowers of these loans do not have to deal with complicated procedures or provide collateral. Firms plan to issue convertible bonds Many companies have proposed raising capital through private placement and issuance of convertible bonds, aiming to attract strategic investors. Both real estate developer Sacomreal (SCR) and FECON Foundation Engineering & Underground Construction (FCN) plan to issue convertible bonds worth VND500 billion (US$23.7 million) with a term of three years. SCR will offer bonds with annual interest rates below 12 per cent to its strategic investors. The conversion rate is 1:100, which means one bond can be converted into 100 shares and bondholders can make conversions three times –30 per cent of the bonds in the first year, another 30 per cent in the second year and 40 per cent in the last year. FCN's bonds have the par value of VND1 million each and pay an interest rate of 6 per cent per year. Bonds can also be converted three times, with the first time 15 months from the date of issuance and the maximum rate 50 per cent of the bonds. The conversion price will not be lower than VND19,500 a share. VNDirect Securities Co also plans to issue VND500 billion ($23.8 million) worth of convertible bonds to its strategic partners and existing shareholders. The 12-month bonds will pay an interest rate of 5 per cent per year. The capital raised from the issuance will fund the company's future M&A projects. Meanwhile, shareholders of FIT Investment Co (FIT) approved the company's proposal of issuing convertible bonds worth VND300 billion ($14.28 million) next year. The one-year bonds will pay an interest rate of just 3 per cent per year and be converted at the rate of 1:10. Nam Bay Bay Investment Corp (NBB) is the only company that will offer convertible bonds in US dollars with a total value of VND210 billion or $10 million. The interest rate will be 5-7.5 per cent per year, but when issuing bonds in Vietnamese dong, the interest rate will be below 10 per cent. Number of new firms up by more than 8% Up to 25,729 enterprises were established in the first four months of 2014, with a total registered capital of VND143 trillion (US$6.8 billion), the Government news portal (VGP) reported. The number of newly established enterprises saw a year-on-year increase of 8.1 per cent, while the registered capital surged by 16.2 per cent against the same period last year, stated VGP, citing figures released by the Business Registration Department under the Ministry of Planning and Investment. According to the Department, 21,489 enterprises were dissolved or temporarily suspended operation without registration in the reviewed period. Meanwhile, 5,863 enterprises resumed operation in the January-June period. Most of these enterprises are located in HCM City (2,044) and Ha Noi (1,366). Almost all the sectors saw a rising number of new enterprises, especially in finance, banking and insurance (up by 276.4 per cent). Exports to RoK hit US$1.5 billion Vietnam’s exports to the Republic of Korea (RoK) reached US$1.5 billion in the first quarter of this year, down 8.9% against the same period last year. However, its export value to the market grew by 32.9% in March to US$563.93 million, according to statistics from Vietnam Customs. Garments topped the list of the export items, earning US$440.36 million (up 34.2%), followed by seafood with US$126.39 million (up 53.3%) and telephone handsets and components worth US$103.35 million (up 645.6%). The RoK is the fourth largest importer of Vietnamese seafood products, after the US, EU and Japan. Vietnam is the third largest seafood supplier in the RoK market. Some products experiencing high growth in the first quarter, included footwear (35.7%), wood and timber products (39%), machinery, equipment, tools (31%) and bags, suitcases, wallets, hats and umbrellas (35%). Strict regulations on plant and animal quarantine create a big barrier to Vietnamese agro-forestry and seafood products. To ensure sustainable exports to the market, domestic businesses and farmers are advised to coordinate closely with each other to establish standardised production processes to maintain quality in line with Korean regulations. Two-way trade turnover between Vietnam and the RoK rose 29.4% in 2013 to US$27.33 billion, of which Vietnam’s exports were US$6.63 billion (up 18.8%) and imports were US$20.7 billion (up 33.2%). Vietnam learns from UK telecom know-how Vietnam and the UK have agreed to draft a memorandum of understanding on telecom market management, making it easier for their companies to explore business opportunities. The decision was reached in London at a meeting between visiting Minister of Information and Communications Nguyen Bac Son and Vice Chief Technology Officer of the UK Federal Office of Communications Steve Unger on April 30. The Vietnamese delegation learnt about the host country’s experience in television digitalisation, audiovisual broadcasting and its future orientations. Unger promised to consider backing Vietnam’s bid for a seat at the Radio Regulations Board under the International Telegraph Union. Informing Unger of Vietnam’s existing telecom market, Son said the sector recorded over 1.26 million mobile phone and 31 million internet subscribers as of the late 2013, earning 9.9 billion USD in revenue. Vietnam has launched successfully a series of satellites into space, including the remote sensing VNREDSAT-1, offering services to 67 central and local radio and television stations across the nation. The country is looking to adopt 3G and 4G bandwidth technology next year and offer digital television services to all households by 2020, he said. Lobster farmers need breeding plan The lack of a sustainable source of breeding stock and poor raising techniques are threatening the young Viet Nam lobster industry, according to experts. Department of Fisheries experts have even warned that lack of proper planning may hinder the development of a rich and promising industry. Reports from the department show that since 2000, between 8,000 to 10,000 lobster farms have been established by farming households nationwide. Most are in the central region, from Quang Binh Province to Binh Thuan Province. Phu Yen Province has the most farms. They have a total of more than 22,500 raising cages (cages made of wood or wire). Khanh Hoa Province is next with more than 16,300 cages. The department estimates that the total output of lobster a year in Viet Nam is nearly 1,400 tonnes. This returns a total annual profit of VND3.5 trillion (US$166 million) to farmers. At present, fishermen harvest young lobsters between 4-6cm from the sea using purse seines, traps and divers. However, they do not sell them directly to farmers, but through go-betweens, according to Nguyen Tri Phuong, deputy director of Phu Yen's Department of Agriculture and Rural Development. "Diseases on the breed may develop in the period between harvesting and their release into cages," he said. This may include so-called "milky" disease, which is assumed to be the result of poor quality handling and rearing techniques. The disease is likely to be induced by stress during handling and poor water quality during transport from the sea to farms. Lobster farmer Nguyen Van Nam from Khanh Hoa Province's Van Phong Bay, said that at present, it was extremely difficult to breed lobsters artificially, so all stock came from the sea. "As a result, the quality breeding stock varies from year to year, making the prices unstable," he said. This year, for example, prices have jumped sharply because of a shortage of supplies. "At the beginning of the year, a kilogramme of lobster could be sold wholesale for nearly VND2.5 million ($119), then it gradually went down to VND2.3 million, VND1.8 million and now is at VND1.6 million ($76)," he said. Meanwhile, Nguyen Thanh Tung, the director of the Institute for Aquaculture Economy and Planning, said that the area available for lobster farming area was continually dwindling as tourism and other types of development flourished. "At the moment, not many special areas have been set for lobster farming, so that many cages are placed inside areas technically set aside for tourism and industry," Tung said. Deputy Minister of Agriculture and Rural Development Vu Van Tam said that it was necessary to create a value-added chain between lobster farmers and processors similar to that set up in the region to develop the tuna industry. Tam also called for a master plan for lobster farming. "Once there is a plan, localities will have the basis to set aside certain sea areas to raise lobsters," he said. Tam also asked research institutes to undertake research on breeding lobsters from eggs. "In the meantime, we need to find ways to reduce losses during breeding and producing better types of feed for the young lobsters," Tam said. Legal evidence lacking before gold shop search decision The Ho Chi Minh City police have admitted that a previous search conducted by the Binh Thanh District police at a local gold shop was legally inappropriate. The Binh Thanh District police, at a meeting with the owner of the gold shop Nguyen Thi Thanh Mai on the same day stated that they had committed mistakes by searching Mai's shop and seizing more than US$14,000. They had also sealed off 559 taels of gold that were on display in the shop. According to Le Anh Tuan, the head of the HCM City Police's Office, the search warrant lacked legal ground. At the meeting, the police returned all the aforementioned seized assets to Mai and requested her lawyer to sign on a commitment document for not appealing in future regarding the case. Previously, on April 24, the police in Binh Thanh District stormed into the shop on Bui Huu Nghia Street at 1 p.m., on Thursday, claiming that they had seen a man trying to exchange a US$100 note for Vietnamese dong. The shop is reportedly not authorised to provide currency exchange services. The police then spent hours thoroughly combing the shop and seized more than US$14,000 in cash and equipment, including a security camera and a CPU, and sealing off 559 taels of gold on display. Later, the police removed the evidentiary seals after Mai produced the relevant papers proving that she inherited the gold from her parents, but continued to hold on to the seized cash worth US$14,000 until April 29. What raised public eyebrows is that the search warrant for the shop was signed by the chairwoman of Binh Thanh District People's Committee on April 23, a day before the currency exchange incident actually took place at the shop. Nguyen Thi Thanh Mai, the owner of the shop remarked that she will close her shop between May 11 and December 31, as she was in a state of panic. Tuyen Quang gets tough on mining firms The Natural Resources and Environment Department of northern Tuyen Quang Province has refused to grant licenses for 13 mining companies and ordered 27 others to shut down in April. The move was taken in an attempt to bring the situation of illegal mining in the locality under control, the department said. The department's inspectors seized six dredgers and three excavators, which were illegally operating in Son Duong District's Vinh Loi Commune and Tuyen Quang City's An Khang Commune. Further, it was estimated that over 17.4 tonnes of lead and 34.5 tonnes of barite were seized at illegal mining sites in Cau Troi Village, Hop Hoa Commune, Thai Hoa Commune and Minh Dan Commune in April. The local authority required mining companies to commit to obey regulations on mining, protect the environment and not negatively impact local people's lives. In a related move, education to raise public awareness about the importance of land, mineral resources and the environment have been strengthened. Findings from the department showed that the province now has about 200 mines, which contain large deposits of metals and minerals. Railway station runs up huge losses Dong Dang Railway Station in northern Lang Son Province, one of the key transit points for passengers and cargo between Viet Nam and China, is losing billions of dong each year because of lack of maintenance and competition from road transport, senior officials have said. All storage buildings are derelict and are often full of mud and stagnant water. A 100-metre long road that connects the station warehouse and Dong Dang Village is full of ruts and holes, making it difficult for trucks to move in and out. The station's management board has repaired the road several times, but the situation quickly deteriorates. Nguyen Van Dat, from Lang Son Agricultural Materials Company, said his company preferred rail transport instead of road freight because it was much cheaper. However, the process of loading and unloading cargo at Dong Dang station was slow. Hoang Van Soi, representative of the Lang Son Railway Transport Service Company said that many businesses switched back to rail transport as road transport costs had grown three times in recent years. But they usually had to be very patient about the time it took. Figures from the station's management board show that the station can only meet 70 per cent of the demand for cargo transport. Last year, total turnover at the station was estimated to be only VND31 billion (US$1.4 million). On average, the station now reports an annual loss of VND9 billion ($428,500) due to its inefficiency in transferring cargo. Vu Kim Ngan, head of the station's management board, said she had to refuse many contracts as the station could barely meet present demand. The problem was made worse by failure to upgrade the station and provide proper maintenance after nearly 20 years of use, she added. Recently, road transport cost rose two or three fold after the Ministry of Transport began tightening its inspection of cargo trucks on the nation's highways. Many enterprises would prefer to switch to rail and even water transport, however, they offer little viable competition to land transport. HCM City backs craft village preservation People and organisations who join in preserving and developing handicraft villages in HCM City can have access to preferential loans. This is part of the 3-year plan over the preservation and development of handicraft villages that the municipal People's Committee approved last year. The plan attached the importance of the preservation of the handicraft villages with the development of new rural areas in these villages so that they can develop in a more sustainable manner. Building infrastructure, improving production capacity, protecting the environment and promoting local traditions and cultural identities are among 18 criteria for building the new rural areas—a programme launched by the Government in 2010. According to the city's Agriculture and Rural Development, in 1999, the city had about 65 traditional handicraft villages, but now, there are about only 20 left. Vice chairwoman of Thai My Commune People's Committee Pham Thi Hieu stated that the commune was famous for rattan village for almost a hundred years. Now, it was struggling to survive because of reduced demand, higher production cost and low income, she noted. She pointed out that previously, more than 1,000 local households made rattan products, but now, the number had reduced to about 300. Local people gave up this profession because their daily income was only VND20,000–30,000 per person, not enough for them to afford a daily life, she said. Vice director of the department Le Hong Hoanh said that a number of the handicraft villages disappeared as a result of urbanisation and tougher competition. "But it cannot deny that the existing handicraft villages help change the economic structure in rural areas towards modernisation and industrialization," she added. Some examples were crocodile farming in Thanh Xuan Village, girdle cake making in Phu Hoa Dong Village in Cu Chi District and flower-growing villages in District 12 and Thu Duc District. Chairman of Phu Hoa Dong Commune People's Committee Nguyen Thanh Son pointed out that cake making workshops in the commune offered jobs for over 1,200 people. Each day, the commune produced about 38 tonnes of girdle cakes, 80 per cent of which were for export, he noted. "The traditional work helps improve income for local people and reduce poverty," he said, adding that resources mobilised to build new rural areas could help vital handicraft villages and strengthen their development. Under HCM City's plan on the preservation of handicraft villages, the city would also offer support to seek market for products, boost trade promotion and develop tourism in these villages. RoK helps Mekong Delta modernise agricultural sector The Government of the Republic of Korea (RoK) has decided to provide the Mekong Delta region with VND500 billion (US$23.5 million) in non-refundable aid to help mechanise the local agricultural sector. Representatives from Can Tho city on May 6 had a working session with the Korea Agricultural Machinery Industry Cooperative (Kamico) to discuss the implementation of the project. Accordingly, 60% of the amount will be used to purchase the latest machines from the RoK for agricultural production. The remainder will be allocated for human resources training and technology transfer. Kamico will also invest up to VND1.4 trillion (US$65.8 million) in building infrastructure to facilitate the implementation of the project. Truong Hoai Nam, Vice Chairman of the municipal People’s Committee, said the project will benefit both sides. Regional farmers will be offered access to modern equipment, increasing the quality and output of products. Vietnam will also be a potential market for the RoK’s enterprises operating in mechanics if their commodities are good and have a competitive price, as most localities across the country currently use made-in-China machines. Vietnam Integrity Alliance introduced An integrity alliance has been established in Vietnam in an effort to combat corruption and promote a healthy business climate in the country. The Vietnam Integrity Alliance (VIA) was introduced at a gathering in Hanoi on May 7, attracting the participation of nearly 100 representatives of business circles, chambers of commerce of Europe (Eurocham), Canadia (CanCham), Australia (AusCham), the British Business Group Vietnam (BBGV) and multinational companies. EuroCham Vice President Michael Behrens emphasised that Eurocham spoke highly of Vietnam re-establishing the Central Internal Affairs Commission, demonstrating the Government’s determination to improve its investment environment and competitiveness. EuroCham is willing to join the alliance to share European integrity initiatives with Vietnamese businesses, he said. VIA is a place for the business community, organisations and experts to provide mutual support to promote integrity criteria in all fields and gather anti-corruption initiatives. The alliance will advocate and advance principles of integrity, transparency, accountability and good governance in Vietnam, aiming to develop Vietnam into an attractive destination for investors. It will also support the business community and encourage organisations, the private sector and domestic and foreign partners to get involved in anti-corruption initiatives. The first meeting of leaders is scheduled to take place in late June. Making use of ASEAN market to boost trade Vietnam considers ASEAN a big, lucrative market. However, its export growth to ASEAN does not match potential, and anti-dumping lawsuits are likely to occur at any time. To fully tap this market in the lead up to the establishment of the ASEAN Economic Community (AEC) in 2015, a seminar was held in HCM City on May 7 to examine weaknesses and propose viable solutions. The Ministry of Industry and Trade (MoIT) reported that Vietnam’s exports grew strongly despite the global economic crisis and domestic difficulties. The country has 22 products, 27 markets and 19 localities achieving an average export value of more than US$1 billion each. Export structure has shifted positively towards reducing raw products and minerals and increasing processed food and industrial products. Worthy of note is that national trade has gradually been balanced over the past two years. Yet, Tran Thanh Hai, Vice Director of the Import-Export Department under MoIT, said Vietnam’s exports remain unstable, noting its export structure heavily relies on key products, fields and markets. Although Vietnam is a major farm producer, it does not play an important role in controlling market prices in the global supply chain. In addition, the country’s support industry is in its infancy, the added value of industrial products is low, and trade deficit with several countries has surged. Trade value between Vietnam and ASEAN increased four folds from US$9 billion in 2003 to nearly US$40 billion in 2013. The country’s exports to the regional market reached US$18.5 billion in 2013, showing a year-on-year increase of 6.7% while imports were US$21.5 billion, up 2.8%. ASEAN is the third largest consumer of Vietnamese goods, after the US and EU. However, exports now seem to be slowing, and businesses have yet to take full advantage of incentives in ASEAN. Huynh Van Minh, President of the HCMC Union of Business Association, said to realize the goal of an ASEAN Economic Community (AEC) in 2015, member countries should adjust rules of origin in line with international standard to enjoy tariff incentives. In the face of globalization, businesses have no choice but to raise competitiveness, address global challenges such as trade and investment liberalisation, tariff cuts and exemptions, streamline procedures, and form common regulations for goods. Vietnamese businesses are advised to deeply penetrate the ASEAN market in 2014-2015, take advantage of tariff incentives in bilateral trade with Laos, and promote trade with Cambodia. When AEC is formed in 2015, most imported products within ASEAN will enjoy tariff incentives, posing a number of challenges for Vietnamese businesses. Vo Tri Thanh, Vice Director of the Central Institute of Economic Management (CIEM), suggested domestic businesses should be equipped with effective risk management tools, knowledge of technical barriers and macro-economic stability and policy adjustment. They should be provided with up-to-date information and take part in the global supply chain and new, potential areas such as infrastructure development and green growth, Thanh concluded. Quasa-Geruco begins rubber latex exploitation in Laos Vietnam’s Quasa-Geruco JSC held an opening ceremony to launch its rubber latex exploitation’s phase 1 in Savannakhet province on May 7. By the end of 2013 the Vietnamese company had invested US$33 million in rubber plantations in Laos. This year it planned to extract latex from 700 ha and build plant capable of processing 5,000 tonnes of latex a year in the first phase. The company has so far invested VND2.3 billion in building roads, water and power supply systems, schools, and other social welfare programmes in the Lao province. Addressing the ceremony, Lao Deputy Prime Minister Somsavad Lengsavath appreciated Quasa-Geruco’s support over the past seven years, stressing that its investment has given the war-torn province a facelift. He noted that Quasa-Geruco-invested projects have helped employ thousands of local people, reduce deforestation, and contribute to environmental protection, and sustainable economic development. The Deputy PM confirmed that the Lao government will create favourable conditions for the Vietnamese company to improve investment efficiency in the country. DTA helps boost Vietnam-New Zealand trade ties Two-way trade between Vietnam and New Zealand is expected to increase considerably after their double tax agreement (DTA) came into effect as of May 7, said NZ Minister of Revenue Todd McClay. The agreement, signed after talks between NZ Governor-General Jerry Mateparae and Vietnamese President Truong Tan Sang on August 5, 2013, helps reduce costs and taxes on dividends, interest and franchise fees, said McClay. The NZ government always gives priority to maintaining and expanding DTAs, according to the minister. New Zealand has signed a total of 39 DTAs with its key trading partners and investors. Market share for Vietnamese goods set to increase The Prime Minister has approved a project to develop the local market in coordination with the slogan “Vietnamese people priotizing using Vietnamese goods”. Under the project, market shares for Vietnamese goods at distribution channels will be increased to over 80% by 2020. Accordingly, 90% of Vietnamese consumers and local businesses will be made fully aware of the campaign by 2015 while 70% of the people will be able to know about market development group called “Pride of Vietnamese goods)by 2020. All provinces and cities will build media channels to popularize the campaign. To fulfil the goals, solutions have been devised to develop a distribution network of Vietnamese goods and build a channel to connect producers, businesses, distributors and agents in the country to expand the coverage of Vietnamese goods nationwide. Total cost for the project is estimated at over VND229 billion. Vietnam attends Seafood Expo Global in Brussels Twenty-three member businesses of the Vietnam Association of Seafood Exporters and Producers (VASEP) are attending the 22nd edition of Seafood Expo Global, which opened in Brussels on May 6. The exposition, ongoing from May 6-8, is attracting over 25,600 visitors and nearly 1,700 businesses from 76 nations and territories around the globe, displaying their wares of frozen and fresh seafood products, the latest in packaging equipment along with countless displays of advanced technology in preservation and transportation equipment and other ancillary services. Three Vietnamese leading seafood businesses (Vinh Hoang, Hung Vuong and Nam Viet) are introducing several highly improved quality tra and basa fish products, produced with technologically advanced production methods to visitors at the event. Vietnamese ambassador to Belgium and Luxembourg Pham Sanh Chau attending the opening of their pavilions which attracted many international friends, spoke highly of the delicious tra and basa fish dishes, which he says are destined to become a favourite in the European market. The exposition provides an opportune occasion for producers to introduce their products, seek cooperative opportunities, and expand export markets. In addition, it helps seafood exporters and importers meet potential trade partners, assess market trends and get updated on developments and new aquatic products hitting the marketplace. The same day, VASEP and the Vietnam General Department of Fisheries co-organised a seminar discussing sustainable development of Vietnamese catfish farming. At present, catfish farming in Vietnam has been undertaken in strict compliance with international rules on food safety and hygiene and environmental protection. Catfish exports now account for over 25% of the country’s total seafood export volume and over 95% of the world’s total catfish exports. In the past two years, Vietnam has improved the quality of catfish by developing sustainably and applying Vietnam Good Agricultural Practice (VietGap) standards in aquaculture. Many catfish farms have received certifications that they meet requirements of both food safety and hygiene from the US, Europe and Japan. Vietnamese catfish are consumed widely in Europe and one of top ten favourite seafood products in the US. Nguyen Huu Dung, VASEP Vice Chairman said that, the EU is one of Vietnam’s major seafood export markets, adding that the EU market has accounted for 20-25% of seafood products, especially tuna. Catfish are also favourite products of European consumers, he said. To increase added value of exports to the EU, Vietnamese businesses should improve product quality and should pay attention to developing trademarks, he concluded. With support from the EU, Vietnam has built a programme to establish a sustainable supply chain of tra fish for 2013-2017 under which the catfish industry will strive to boost exports of environmentally friendly and safe products by 2020. US supervision on Vietnamese catfish poses threat to seafood exports US trade barriers will not only pose risks to aquatic products from Vietnam but also from other ASEAN nations, told a recent roundtable on Vietnam-US agricultural cooperation in Washington DC. Vietnamese experts briefed US business representatives about trade and investment opportunities in Vietnam’s agro-forestry- fishery sector especially prospects for aquaculture. US businesses agreed that Vietnam has great potential for attracting foreign investment as the agricultural sector has made up over 20% of GDP and its export turnover is expected to reach US$30 billion by 2015. However, US trade barriers (unreasonable tariffs such as anti-dumping and anti-subsidy taxes) are one of the biggest hindrances for import-export activities between the two nations. The biggest risk for Vietnam’s agricultural and seafood exports is the US Department of Agriculture supervision program on catfish. If the program is applied, Vietnamese exports of tra and basa fish (scientifically named Pangasius) will be suspended for a long time to meet the US’ new requirements. Vice President of the National Fisheries Institute (NFI), Robert DeHann said that the supervision program aims to create trade barriers to protect several small seafood enterprises. Robert Dehann expressed concern that if the program is carried out in the next years, it will create an immediate ban on some imported aquatic products from certain nations, including Vietnam. He asked the US Government to abandon the program, adding that Vietnam also requested the authorised agencies in the US to do alike. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR