BUSINESS IN BRIEF 21/6

NA approves revised Law on Public Investment

The National Assembly (NA) on June 18 passed the Law on Public Investment with yea votes from 440 of 447 deputies, accounting for 88.35% of all NA deputies present.

The new law, which comprises six chapters and 108 articles and will take effect on January 1 next year, regulates the management and use of public investment capital, State management of public investment, rights, responsibilities and obligations of agencies, organizations and individuals related to public investment activities.

Currently, the most notable issue is that for public investment projects using foreign capital such as official development assistance (ODA) projects, donors usually have their own rules for contractor selection or project implementation. For instance, using Japanese ODA loans disbursed via the Japan International Cooperation Agency (JICA), Vietnam has to pick Japanese contractors.

Given the new law, if an international agreement, to which Vietnam is a signatory, have any differences from the law, regulations of the agreement will apply. The revised Law on Public Investment will only apply during the project approval, implementation and supervision processes.

If a public investment project is implemented abroad, the parties involved will have to count on regulations in international agreements to which Vietnam is a signatory and those between Vietnam and the host country.

The NA Standing Committee has also revised some articles to make the regulations more practical and feasible for implementation.

However, to better project supervision, the Government must provide circulars with specific guidelines for implementation of the new law.

Legislators also passed the revised Construction Law in on June 18’s session with 397 votes out of 432 deputies present, accounting for 79.72%.

The revised Law on Construction with 10 chapters and 168 articles fixes shortcomings of the existing law. The law will also assign more responsibility to owners of construction projects for ensuring projects are carried out efficiently and follow regulations.

Also on June 18, NA deputies debated draft amendments to the Law on Housing, focusing on foreign investment in housing and real estate projects and creating more favorable conditions for healthy and transparent development of the property market.

The draft revised Housing Law with 13 chapters with 179 articles is also expected to tackle shortcomings of the current law.

The new law also contains mechanisms or incentives to boost the development of social housing for disadvantaged and low-income people.

Deputies also discussed such issues as social housing development funds and houses for civil servants.

HCM City seeks Dutch support in dairy cow breeding

HCMC is proceeding with plans to develop seedlings and dairy cows, and expects that the Netherlands will share its strong experience in these two fields.

HCMC chairman Le Hoang Quan told Dutch Minister of Agriculture Sharon Dijksma on Wednesday that the city wanted to learn lessons from the Netherlands to develop dairy cow herds and seedlings for supply to southern Vietnam.

Dijksma said representatives of 22 companies accompanied the Dutch Prime Minister’s visit to Vietnam earlier this week and they had discovered many opportunities to partner with local counterparts in cultivation and husbandry, especially in breeding dairy cows as the demand of Vietnamese consumers for fresh milk is on the rise.

Currently, HCMC is cooperating with the Netherlands in various fields, including climate change, food safety and checks for quality of farm produce.

The city is learning from Rotterdam City’s experience in climate change and flood control.

The cities have completed their first phase of cooperation and are working on the next phase with a focus on training staff for HCMC to better tackle the issues in these fields.

Quan said there had been 75 valid investment projects of the Netherlands with combined investment of nearly US$700 million as of the end of last month, as well as 28 offices of Dutch firms in the city.

Two-way trade between HCMC and the Netherlands stood at US$625 million last year and US$235 million in the first five months of this year.

Exporters urged to meet EU standards

To boost exports to the European Union (EU), a demanding market with strict regulations and standards, businesses have no choice but to develop a viable strategy, improve management and apply advanced technology.

The recommendation was made by Deputy Minister of Industry and Trade Tran Quoc Khanh at a Hanoi seminar on June 19, examining EU requirements for imports.

Khanh noted that approximately 42% of Vietnamese products currently enjoy the EU’s Generalised System of Preferences (GSP), however, when the EU-Vietnam Free Trade Agreement (EVFTA) is signed, around 90% of products will be exempt from tax, opening a huge opportunity for Vietnam.

One of the biggest challenges facing Vietnamese exports to the EU is anti-dumping measures from the Agreement on Technical Barriers to Trade (TBT), and the Sanitary and Phytosanitary Standards (SPS) agreement.

Le Quoc Bao, former director of the TBT Office in Vietnam, said to overcome hurdles, businesses should gain a better understanding and update information about export markets. He proposed that State agencies build regulations and standards in line with international law.

Nguyen Thi Quynh Nga from the Ministry of Industry and Trade said the EU market requires importers to meet strict technical regulations as well as laws related to time delivery and quantity.

Businesses should digest information about FTA negotiations and complete regulations on country of origin (C/O) so as to enjoy incentives and make plans to take part in regional supply chains.

To penetrate the market, domestic businesses should study the EU’s Food Law, regulations on brand names, packaging and food hygiene and safety, effectively apply management methods and ensure quality of products, said Le Thanh Hoa, Vice Director of the SPS Office in Vietnam.

Last year, two-way trade turnover between Vietnam and the EU surpassed US$33.7 billion, an increase of 16% against the previous year, of which Vietnam’s exports were worth US$24.3 billion, up 19%, and imports fetched US$9.4 billion, up 7.5%.

In the first five months of this year, Vietnam’s exports to the market are estimated at US$11.62 billion, up 11.7%.

The EVFTA has entered its eighth round of negotiations and is expected to conclude late this year.

UK fuel companies visit Vietnam

Executives from several leading UK companies in the oil and gas services industry will begin a five-day visit to Vietnam on June 23 to seek investment opportunities.

After arriving in HCM City on June 23, they will hold meetings with Vietnamese companies to explore the market and examine the possibility of establishing partnerships.

The delegation will also seek to understand the dynamics of the oil and gas industry in Vietnam, gain further understanding of the potential business opportunities, and foster relationships with operators, contractors, and suppliers operating in the country.

The delegates represent industries ranging from manufacture of specialist vacuum pumps and industrial chemicals products to heat exchangers, cabinets to store and protect fire-fighting energy and telecom cables, underground and submarine power transmission cables, and systems gas turbines.

They also offer services like providing technical personnel to the oil and gas industry, management training, recruitment, and others.

The trip will be organized by the Energy Industries Council and UK Trade & Investment Vietnam.

Vinaphone to slash rates for international roaming

Vinaphone, announced on June 18 that it will reduce rates for its international roaming services in Australia, Canada and the United States, while making telephone calls back to Vietnam.

The third-largest mobile network operator's rate will decrease from 55.46% to 11% for international roaming services.

The international roaming charges for other services were also reduced.

Roaming rate for telephone calls within the same network will be charged VND17,000 (US$0. 80) per minute, a decline of 46.8% compared with the previous rate. Users receiving telephone calls will be charged VND13,000 (US$0.60) per minute, a decrease of 13.33%.

The rate for sending SMS will be VND8,000 (US$0.38) for each, a reduction of 11.11%.

Service charges for international roaming in the three countries will decrease by 25% to VND3,000 (0.14) for 10Kb.

The fee for message receipt will remain free. The new rates will be applicable for all subscribers of the network.

This is the second time Vinaphone has lowered its roaming rates within a year.

Hungary opens trade office in Vietnam

The Hungarian National Trading House (HNTH) was launched in Hanoi on June 18 with the aim of promoting trade activities between Hungarian and Vietnamese enterprises.

The opening marks a boost in economic co-operation between the two countries that has occurred in recent years.

CEO of the worldwide HNTH, Gyorgy Kerekes said the establishment of the Hungarian National Trading House helped speed up bilateral trade across a range of sectors.

"The HNTH in Vietnam is highly considered as a bridge to assist enterprises from two sides in main sectors including agriculture, food, medical devices, information and technology, environment, health care, infrastructure and construction," Hungarian Ambassador Eszter Torda said.

The office will help enterprises seek out potential business partners, prepare commercial transactions, conduct business negotiations, provide market information, bench marking, and assist in raising capital.

This is the 10th office of the HNTH, with the Hungarian Government expected to open a further 15 offices around the world by the end of this year.

Expanding bilateral co-operation between Hungary and Vietnam is an important cornerstone in the government's "Opening towards the East" policy.

VCCI forecasts rising sales towards year-end

Total sales for Vietnamese businesses are expected to rise in the second half of this year, the Vietnam Chamber of Commerce and Industry (VCCI) has announced.

A report released by the VCCI on June 18 in Hanoi revealed that the first half of 2014 saw a sharp improvement in business conditions compared with the second half of 2013, despite the impact of various challenges.

According to the report, average selling prices in the six-month period had slumped over the second half of 2013, indicating that enterprises have implemented measures to drop prices and increase discounts in order to boost sales.

It also noted that the most positive trend during the period was an increase in labour productivity. Firms have perceived that sustainable growth does not rely solely on capital but also on high labour productivity.

In addition, the index on the legal environment and macro-economy was higher due to improvements in the quality of regulations and administrative procedures.

The report suggested that improved access to market information, technology and infrastructure, such as electricity, water and waste disposal, as well as increases in officers' capacity to effect change have contributed to the promising prospects evident in the second half of 2014.

However, businesses have raised concerns over the domestic market, production and costs.

The VCCI's report showed that in the first five months of the year, more than 21% of businesses reached their annual turnover target, 28% of the total hit 90% of the set target, and 16% met 70% of the annual target.

In terms of profits, 14% of all businesses surveyed achieved the whole year's target. However, 4% of these enterprises halted operations for an average period of a month and a half as they were able to establish a market for their products. This indicates that gaining a foothold in the market has posed the most significant challenge to Vietnamese businesses.

Vietnam attends int’l food, beverage fair in Malaysia

Vietnam has displayed its potential products at the international food and beverage fair in Kuala Lumpur, Malaysia, on June 19-21, in a hope of boosting its exports to the country and other global markets.

The event was attended by 300 businesses from nearly 30 countries and territories. The Vietnamese Embassy in Malaysia is also showcasing publications and documents on Vietnam’s investment and business environment, which has grown rapidly in recent times.  

Through the fair, Vietnamese products are expected to be welcomed and introduced to visitors, allowing Vietnam to promote its image and products to the world, said the embassy’s Trade Counsellor Nguyen Son Ha.

On Vietnamese display are coffee, tea, canned fruits and food which drew numerous businesses and visitors to learn and exchange information.

Malaysia is Vietnam’s third largest trade partners in ASEAN.

Since 2010, the two countries have seen a strong growth of over 20% in bilateral trade. In 2013, two-way trade reached US$9.1 billion, a year-on-year increase of 15.25%. Of this figure, Vietnam’s exports were valued at over US$4.9 billion.

Vietnam ranks second among foreign investors in Laos

Vietnam has so far invested a total of US$4.7 billion in Laos, making it the second largest foreign investor in the country.

The Ministry of Planning and Investment of Laos reported that total foreign direct investment (FDI) in Laos has amounted to US$24 billion since 1986.

China tops the list, having injected US$5.2 billion, followed by Vietnam (US$4.7 billion) and Thailand (US$4.6 billion).

The top ten investors in Laos also include Thailand, the Republic of Korea, Japan, France, Malaysia and the Netherlands.

Most FDI projects were focused on hydroelectricity generation, mineral exploitation, agriculture, hotels and hotel services, industry, and handicraft making.

The ministry said foreign investment has helped fuel Laos’ economy to grow at 7.5% annually over the past 10 years.

Laos hopes to attract additional foreign investment in the near future due to its open-door policy and investment incentives.

Investment forum looks at Vietnam opportunity

The Vietnam Investment Forum (VIF 2014) entitled “The Rise of Frontier/Emerging Markets and Opportunities for Vietnam?” was held in Ho Chi Minh City on June 19.

The event provided a golden opportunity for foreign and domestic experts, managers and enterprises to discuss issues relating to global financial economy, prospects for economic development, and investment opportunities in Vietnam.

According to world’s leading investment advisor Dr. Marc Faber, when the risk of financial bubbles in many developed economies is growing, investors tend to be keen on emerging markets like Vietnam.

 He also suggested that to attract investment and meet investors’ demand, Vietnam should promote transparency, simplify administrative procedures, effectively settle non-performing loans and accelerate the equitisation of state-owned enterprises (SOEs).

Experts stressed that in recent years emerging markets have played an important role in fuelling the global economy and proved their appeal to foreign investors.

Vietnam has also become an attractive destination for international capital flows due to its stable macro-economy and strong growth prospects.

Deputy Minister of Planning and Investment Nguyen Chi Dung emphasised that Vietnam not only offers new opportunities to foreign investors but also creates favourable conditions for them to do efficient and mutually beneficial business in the country.

As of April 2014, Vietnam has attracted 16,300 foreign direct investment (FDI) projects from over 100 countries and territories, with a total investment capitalisation of nearly US$238 billion. More than 100 multinational corporations are currently operating in Vietnam.

During the process of  economic development and international integration, Vietnam constantly improves its investment environment to attract both direct and indirect foreign investment, Dung told the participants.

Climate Smart Agriculture Alliance introduced

The official debut of the Climate Smart Agriculture Alliance (CSA) is considered an initial breakthrough in expanding and coordinating global climate smart agriculture.

The statement was made by Harry Palmier, Senior Partnerships Adviser at the Global Forum for Agricultural Research (GFAR), at a CSA conference held in Hanoi on June 19 between Vietnam, South Africa and the Netherlands.

Van Seeters from CSA Secretariat said the alliance aims to support governments in shifting agricultural farming methods, food systems and social policy in line with climate change and the effective use of natural resources.

The alliance also links traditional sectors and organisations and supports the establishment of partnerships and international processes related to agriculture, food safety and climate change, for its members.

Hiroyuki Konuma, Assistant Director General of the UN Food and Agriculture Organisation (FAO), said the conference provides a good opportunity for participating countries to discuss challenges and complicated connectivity and breakthroughs in agriculture and rural development.

The Netherlands Deputy Minister for Agriculture Hans Hoogeveen said investment in agriculture is the most effective way to reduce poverty, and promoting environmental issues in agriculture will be key to this investment. Accordingly, he said it is necessary to consolidate the role of the private sector and investors in climate smart agriculture.

Vietnam’s Minister of Agriculture and Rural Development Cao Duc Phat expressed hope that the conference will come up with valuable recommendations on the establishment of the CSA due to make its debut at the UN Summit in September.

Vietnam AutoExpo 2014 opens in Hanoi

The 11th Vietnam International Automobile Supporting Industries Exhibition & Conference opened at the Vietnam Exhibition and Fair Centre in Hanoi on June 19.

Hundreds of stands showcasing various modes of transport, such as tourism cars, buses, motorbikes, bikes and vehicles for special purposes are on display at the 10,000sq.m. event.

There are also exhibits of equipment and fuels for manufacturing, production and assembling automobiles, motorbikes and bikes, tools, components and spare parts as well as garage repairs, maintenance, banking, insurance services and consultancy.

The expo attracted great attention from well-known brand names, such as Nissan, Renault, Harley-Davidson, Chacman, JAC, Dong Phong, FAW, Vu Linh, Motul, Hanoi Plastics, BNB, Youngmin, Innotek, Nhan Hoa, GSI Vietnam, TC Group, Tan Phat and Viet Son.

At the opening ceremony, Deputy Minister of Industry and Trade Ho Thi Kim Thoa said Vietnam’s economic recovery, its improved infrastructure and a high demand for vehicles create firm foundations for the development of the automobile and motorbike market.

Vietnam will have around 166,000-235,000 new cars by 2015 and 836,000 by 2020. The country is the fourth largest motorbike market in the world with 33.5 million units by 2020.

Thao emphasised that the Vietnam AutoExpo will help support businesses, stimulate market, and offer many trade opportunities for automobile manufacturers.

Banks move to decrease borrowing costs again

Some commercial banks have cut deposit interest rates by 0.2-0.5 percentage points in the past 10 days to reduce input capital costs and further lower borrowing costs.

Vietcombank, one of the big four by assets in Vietnam's banking system, cut the annual deposit interest rate for three months and shorter terms by up to 0.3 percentage points to 5%. Some branches of Military Bank lowered its highest deposit interest to 7.5% from 8% per year. Other small banks listed deposit interests at 8.5-8.7% annually.

Economist Tran Du Lich, cited by Thoi Bao Tai Chinh (Viet Nam Financial Review), said, "The cut is to test the market validity."

The 5% deposit interest will be good as it was likely to guarantee a positive real interest rate for depositors and to help banks circulate their capital in the economy, Lich said. [A positive real interest rate is a situation when the nominal interest rate is higher than the inflation rate].

This early step on deposit cuts is likely to mark the second wave of adjustments since the beginning of the year. It should be noted that the cut occurs at a time when banks are struggling with high-cost abundant capital sources that are getting harder to lend.

Prior to the cut, industry experts said trimming deposit rates was a must to make capital cheaper for borrowers and make loans more accessible.

Luu Duc Hai at the Development Strategy Institute under the Ministry of Planning and Investment said, "Vietnamese enterprises are bearing too high capital costs that reduce their competitive and productive capacities in exports and domestic markets."

Although Vietnamese exporters have access to special interest rates ranging between 8% and 10% annually, the borrowing costs are estimated to be 1.4 to twice as high as those prevailing in some regional countries. On the other hand, Vietnamese producers in non-priority sectors are paying between 10% and 13%.

At the May Government meeting, the State Bank of Vietnam Nguyen Van Binh said credit demand was weak.

The credit growth of Vietnam's banking system rose to 1.31% between January and May 23; the total supply was an estimated 5.28% higher than in the end of last year; and the total mobilised capital increased by 4.2%. This is sparking doubts about the feasibility of a 12-14% credit growth by the year-end.

Officials discuss agriculture in Asia-Pacific

Representatives from governments, private sectors and farmers' unions in Asia Pacific have been discussing complex and interlinked challenges that require major shifts in agriculture and rural development in the region at a three-day consultative meeting that kicked off in Ha Noi on Wednesday.

Hiroyuki Konuma, assistant director-general and regional representative for Asia and the Pacific for the Food Agriculture Organisation of the United Nations (FAO), said: "This conference gives Asia a unique opportunity to identify common needs and objectives and create co-ordinated actions as has been done in other continents."

The role of the private sector and private investment can be greatly strengthened by mainstreaming climate-smart agriculture.

Hans Hoogeveen, the Dutch vice minister for agriculture, said that investing in agriculture was the most effective way of reducing poverty and hunger.

Strengthening the environment for agriculture would be the key to supporting such investments, he said.

The key message and conclusions of the meeting will be included at the Global Consultative Meeting in Hagua in July, and the Global Alliance for Climate Smart Agriculture in New York at the United Nations Secretary General's Climate Summit in September.

Harry Palmier, a senior partnerships adviser at the Global Forum on Agricultural Research, said that the launch of the alliance next September was not the objective, but would be a major step forward towards an action-oriented, inclusive and effective allience entrusted to develop a responsive Action plan for Climate Smart Agriculture composed of coherent initiatives at national, regional and international levels.

The meeting, which will wrap up today, was co-organised by the governments of Viet Nam, South Africa and the Netherlands with support from several organisations including the FAO, the Asian Development Bank and the government of Italy, to establish the Alliance for Climate-Smart Agriculture.

Industries unable to source locally-made components

Viet Nam's support industries are unable to meet market demand despite their recent growth, with the use of local components in industrial products being no more than 20 per cent, and a mere 10 per cent in high-technology industrial products.

Demand for components from companies in the HCM City High-Tech park is diversified, ranging from electronic parts, moulds to make plastic parts, and high-quality screws and bolts to gloves, masks, and others.

But local supply source is very limited.

Speaking to Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) newspaper, Tran Tien Phat, managing director of Viet Nam Datalogic, which produces bar-code reading machines, said the ratio of locally made materials used by his company is very small, at 3.2 per cent in 2012 and 3.69 per cent in 2014.

"The proportion of local parts has increased a little but [they are of] low value, like packaging and plastic parts," he said.

Local manufacturers cannot meet quality, technology, quality management system, and price requirements, he said.

"If local enterprises import new machines, depreciation accounts for a very large proportion of the price and reduces their competitiveness, but they face difficulty in importing used machines."

To meet the target of increasing use of local parts from the present 4 per cent to 10 per cent by 2017, his company plans to focus on chipset, aluminium, and plastic spare parts, he revealed.

A spokesperson for Intel agreed that greater use of local parts would benefit both the US chip maker and local suppliers, but said local support industries in Viet Nam are very inexperienced.

Last year Intel bought from 94 domestic vendors products and services worth US$11 million including packaging, chemicals, and maintenance, he said.

Meanwhile, Japanese firms increased their local sourcing from 27.9 per cent of the total cost of parts in 2012 to 32.2 per cent last year, but the figure was still low in comparison with neighbouring countries like Thailand 52.7 per cent and Indonesia 40.8 per cent.

"Japanese enterprises always want to increase local parts purchase to reduce production costs and increase competitiveness," Osato Kazuhiko, director of the Japan External Trade Organisation (JETRO) in HCM City, said.

To promote support industries, Kazuhiko suggested, the Government should adopt a low-interest-rate policy (of 2-3 per cent) for them, help train and identify human resources, offer tax breaks, and focus on technology transfer.

Phat suggested that the Government should reduce import tax for support industries, help them invest in technology, and offer tax breaks to foreign firms buying machinery required to produce all their components.

Last year export of high-tech products from the city was worth US$2.93 billion, an increase of 15 per cent and accounting for 14.6 per cent (without crude oil) of its GDP.

"Of this, the HCM City High-Tech Park contributed $2.7 billion, or 90 per cent," Le Bich Loan, deputy head of the park, said.

Viettel expands TV offering with new cable services

Viettel, Viet Nam's largest telecom operator, has deployed the Ericsson Multi-platform Video Processing solution with the Ericsson AVP 4000 system encoder to deliver cable TV along with its existing IPTV services.

Ericsson has provided Viettel with a solution optimised for scale and reliability, while also delivering cost savings due to the high efficiency of the Ericsson AVP 4000.

Viettel will also take advantage of the TV competence and global presence of the company's services offering.

Ericsson will be responsible for services such as design, supply and systems integration - for systems involved in everything from acquisition to transmission at the head-end, inclusive of multiple sub systems - as well as commissioning and support of the operator's complex ecosystem.

Ba Ria-Vung Tau needs more FDI

The southern coastal province of Ba Ria-Vung Tau should give priority to developing seaports and logistics industry in order to attract more foreign direct investment (FDI).

Deputy Director of the Central Institute for Economic Management (CIEM), Nguyen Thi Tue Anh said this during a meeting with provincial authorities on the FDI attraction strategy in the province on Tuesday.

She also suggested to the province that they should develop other important sectors including steel manufacturing, shipbuilding, engineering and support industries as well as food processing, marine tourism and health-care services.

In recent years, the province has attracted approximately 300 foreign-invested projects with a total registered capital of nearly US$28 billion, the provincial People's Committee Vice Chairman Ho Van Nien said.

However, the projects mainly specialise in assembling or sub-contract products, he said. In the time to come, the province needed to draw up new FDI attraction strategy with focus on luring small and medium-sized enterprises, he added.

According to CIEM, foreign-invested enterprises have made an effective contribution to increasing the provincial GDP, fostering business development and creating more jobs for locals.

However, the province still depended too heavily on a few sectors that required a lot of investment, natural resource exploitation and fewer labourers. In addition, FDI attraction in the service sector has not yet been exploited drastically and co-ordination between domestic and foreign investors remained poor.

The institute blamed the province's unsatisfactory performance for its weak industry, low involvement of the private sector and high proportion of agricultural labour. It also blamed the large unskilled labour force, as well as cumbersome management and non-implementation of measures to attract investment.

SCIC equity to increase tenfold: Decree

The State Capital Investment Corporation (SCIC) will have a charter capital of VND50 trillion, or US$2.38 billion, 10 times more than the current level.

The increase is mentioned in Decree No 57/2014/ND-CP regulating SCIC operations which was issued on Monday and will take effect on August 6.

The corporation, with State-invested equity, is assigned to manage the State capital in enterprises entrusted by ministries and ministry-level agencies, as well as the People's Committee of provinces and cities directly under the central government.

It is their responsibility to preserve the investments, and maintain profitability and improve capital management efficiency at the enterprises. It is also supposed to implement other Government-assigned tasks involved in company organisations, privatisation, financial consultancy, and merger and acquisitions.

The SCIC will have to be dissolved if it suffers losses in three consecutive years, or fails to complete the missions within two years.

The SCIC last year obtained VND4.5 trillion, or $214.28 million, in pre-tax profits, 6 per cent higher than the annual target and up 23 per cent over the previous year. It contributed nearly VND1.8 trillion, or $85.71 million, to the State budget in 2013.

Under a restructuring plan for the SCIC until 2015, issued by the Government last December, the corporation will have to divest from 376 enterprises while retaining long-term investments in four businesses, including FPT Telecom, Vinamilk, Hau Giang Pharmaceutical and Viet Nam National Reinsurance Corp.

While the scheme aimed to boost economic efficiency, recent media reports said the corporation was facing significant challenges in divestments due to unfavourable stock market developments.

Vinare to increase its charter capital

Viet Nam National Reinsurance Corporation (Vinare), coded VNR on HNX, has submitted to the State Securities Committee its proposal to raise charter capital to VND1.31 trillion (US$60,000), news website baodautu.vn reported.

The capital increase, which will be done by issuing additional shares, aims to improve the financial capacity of the reinsurer, expand the market and diversify reinsurance products.

At the annual shareholder meeting in April, Vinare planned to gain a gross written premium of VND1.51 trillion ($68 million), net written premium of VND575 billion ($26 million) and pre-tax profit of VND445 billion ($20 million). It also expected a projected dividend of 15 per cent.

In 2013, Vinare earned a gross written premium excluding pilot agriculture insurance of VND1.425 trillion ($64 million), net written premium of VND500 billion ($22 million) and net underwriting profit of VND92.7 billion ($4.21 million). Vinare's income from investment and other activities was VND309 billion ($14 million) and pre-tax profit was VND401 billion ($18 million).

Vinare was assigned a financial strength rating of B++ (Good) by international credit rating agency A.M. Best.

Yesterday, VNR closed at VND17,800 (80 US cents), down 0.71 per cent.

Australia increases aid for Mekong Delta region

Australia will roll out more security and defence, education, and healthcare projects in the Mekong Delta region, bringing direct benefits to millions of local people, said Australian Consult General John McAnulty.

At a meeting with Vice Chairman of the Can Tho City People’s Committee Truong Quang Hoai Nam on June 19, John noted with satisfaction drastic changes in the Mekong Delta region since the Australian-funded My Thuan Bridge was built 15 years ago.

John hoped that once Cao Lanh Bridge, another Australian-funded project, is completed, it will bring about further economic benefits to local people.

He revealed that Australia offered the world’s most advanced machines to Can Tho hospital to provide free eye surgery for poor people last year and is committed to providing more modern medical equipment to the city in the future.

Next year, there will be exchange programmes between students from the two countries, offering more Vietnamese students the chance to study down under and vice versa.

Four Australian-invested projects totaling VND6.2 billion have been put into operation in Can Tho, contributing to improving the living conditions of the local people and raising public awareness of climate change adaptation.

Timber industry needs to have stricter controls

The Ministry of Agriculture and Rural Development has asked localities nationwide to tighten management over timber processing establishments.

The deputy minister and head of General Department of Forestry, Ha Cong Tuan, said that the move aimed to help protect consumers' rights and ensure the legality of traded timber.

He said that previously, it was quite common to see authorities grant licences for timber processors to open workshops at the edge of forests.

"Taking advantage of the locations, many processors purchase and process illegally logged timber," he said.

Other timber processors, especially small ones, were found to operate without business licences or fail to show legal documents relating to the origin of the timber they used, Tuan said.

"The violations cause difficulties for authorised agencies involving in managing forestry products and Government could not collect proper taxes from the timber business," he said.

In its latest direction issued last week, the Agriculture Ministry asked People's Committees at cities and provinces to review timber processing activities.

They would stop granting licences for individuals and organisations to operate in areas which were not earmarked for timber processing.

Those who could not show evidence of using sustainable timber would not get the licence, Tuan said.

Last year, Viet Nam posted a $5.5-billion export turnover in timber products, having exported to more than 100 countries, with the EU as one of the leading export markets.

Viet Nam's timber export industry faced a number of challenges, including low added value due to the high woodchip export ratio, indirect exports through the EU importers and non-trademarked products.

Complicated domestic timber flows and different timber sources [Vietnamese timber enterprises imported 40-50 per cent of raw materials] made it difficult to control illegal logging, making Viet Nam a high-risk exporter, he said.

The country is currently negotiating to sign the Forest Law Enforcement, Governance and Trade/ Voluntary Partnership Agreement (FLEGT) with the European Union this year to ensure the legality of Vietnamese timber before exporting to EU.

The FLEGT Action Plan, approved by the EU in 2003, came into effect in March 2013, as one of the EU's responses to international concerns about illegal logging and trading.

Hanoi to issue bonds for infrastructure projects

Hanoi plans to raise up to 3.6 trillion VND (171 million USD) via bond issues next month for key infrastructure projects across the city.

The money will be spent on the extended Road 5 and Belt Road 1 stretching from O Dong Mac to Nguyen Khoai dyke, Nam Son waste treatment complex, Duc Giang hospital and a capital urban transport project, said Director of the Hanoi State Treasury Dao Thai Phuc.

Over 2.2 trillion VND (100 million USD) of the sum is expected to be disbursed this year.

The city is considering issuing bonds with a longer maturity, Phuc revealed.

HSBC comments forex rate adjustment

The Hong Kong-Shanghai Bank Corporation (HSBC) has updated its Data Reactions on Vietnam ’s economy, to take into account the latest adjustment of the VND/USD exchange by the State Bank of Vietnam.

“This should not come as a major surprise given that the USD-VND had been trading on the top side of the daily band and given recent comments from the SBV Governor,” said a press release issued by HSBC on June 19 in response to the central bank’s 1 percent rise in the rate.

The SBV on June 18 announced that the VND/USD inter-bank exchange rate would increase as of June 19 after remaining intact for a year.

One USD is now equivalent to 21,246 VND, instead of 21,036 VND. The rate at banks can be 1 percent lower or higher than the interbank rate, ranging between 21,034 and 21,458 VND per 1 USD.

According HSBC, this is the first shift in the rate since June 28, 2013 when the currency was weakened by around 1 percent versus the USD.

HSBC said the outlook for the VND should be relatively stable from these levels over the coming year, given the better balance of flows and buid-up of FX reserves. However, lower real interest rates could pose a risk further down the line if demand and inflation start to pick up.

Additionally, the financial institution said it had been wary of risks posed from a relatively loose monetary policy, but said that this one-off and small depreciation of the VND should not lead to an aggressive weakness in the currency.

The VND has been better supported by the more balanced nature of FX inflows in the last year. The trade balance has been relatively neutral, thanks to improving exports as much as soft import growth. At the same time, FDI inflows have picked up, HSBC said, adding that that together these flows have allowed the SBV to increase their FX reserves buffers.

Rubber sales drop in five months

Vietnam saw a fall in both rubber output and export in the first five months of this year, according to the Vietnam Rubber Group (VRG).

In the January-May period, the country shipped abroad 239,000 tonnes of rubber for 473 million USD, down 20.2 percent in volume and 39.2 percent in value compared to the same period last year, reported the VRG.

Meanwhile, the average rubber price also dropped 25 percent year on year, falling to 1,990 USD per tonne.

By June 13, the VRG alone exported 42,043 tonnes and sold out 39,767 tonnes in the domestic market, earning over 3.7 trillion VND in total, equivalent to 24.6 percent of the yearly plan.

Experts commented that despite dips normally seen in the first half of every year, the results are still disappointing.

According to the VRG, the reasons behind the fall were the gloomy global economic situation and the abundant supplies and low demand in the world market, leading to a high inventory and low price.

A recent report by the International Rubber Study Group also showed that 174,000 tonnes of natural rubber in the world will be unsold this year.-

Dong Nai: FDI firms create large amount of jobs

Foreign direct investment (FDI) enterprises based in the southern province of Dong Nai have generated jobs for nearly 20,000 workers since the beginning of this year, a local official has said.

Deputy Director of the provincial Department of Labour, Invalids and Social Affairs Lam Duy Tin said the province created jobs for some 46,000 people in the first half of the year, including 28,000 working at foreign-invested and domestic businesses.

In 2014, large-scale FDI enterprises in Dong Nai expect to recruit 62,000 additional workers, but only 30 percent of the targeted volume have to date been reached. Thus, the labour demand is predicted to be high in the remaining months of the year as local firms need more workers to fulfill orders by the year’s end.

In easing difficulties for the unemployed, Dong Nai spent more than 135 billion VND (6.37 million USD) supporting 14,500 unemployed labourers and got many of them involved in vocational courses to seek new jobs.

In the second half of the year, the province targets generating jobs for 44,000 additional labourers. Now, more than 1,000 FDI firms are operating in the locality, creating employment for over 450,000 workers.

Lam Dong reviews biannual socio-economic situation

The Central Highland province of Lam Dong increased its agro-forestry and fisheries production by 28 percent year-on-year to 2.61 trillion VND ( 123.16 million USD) in the first half of this year, while continuing to expand trade activities and services, attracting 2.3 million tourist arrivals.

The outcomes were reported at a June 19 meeting between a delegation of the Central Highlands Steering Committee, led by Standing Vice Chairman Tran Viet Hung, and key officials of the province.

The province continued to effectively realise support programmes for beneficiaries of social welfare and poor and near-poor households, while ensuring local security and public order, provincial officials reported.

The production and business activities of many local firms were limited as some roads connecting Lam Dong with other Central Highland and southeastern provinces have been falling into disrepair.

Speaking at the event, Hung said the committee will team up with relevant ministries and agencies to handle the difficulties for the province and recommend the Ministry of Transport to deal with the traffic infrastructure issue as soon as possible.

He urged the province to continue to lure investment and cut the interest rate of loans for expanding coffee-growing areas, while also extending the payback period. He also asked them to promote the 2014 Central Highlands - Da Lat National Tourism Year.

Foreign investment surges in Ho Chi Minh City

Ho Chi Minh City saw an 83 percent surge year on year in foreign direct investment in the period from January 1 to June 15, according to the municipal Department of Planning and Investment.

A total of 162 new projects were licensed in the period, bringing in 794 million USD in registered capital.

At the same time, 107 million USD was pumped into 49 operating projects, equal to only 35.6 percent from the figure for the same period last year.

According to statistics announced by the Ministry of Planning and Investment's Foreign Investment Agency on May 26, total FDI in the first five months of this year declined 34 percent to 5.51 billion USD.

The southern province of Binh Duong topped the list of FDI destinations, followed by HCM City and Dong Nai.

Binh Duong announces support package for riot-affected firms

The southern province of Binh Duong announced on June 18 the first assistance package worth 286 billion VND (13.4 million USD) for 37 businesses, which are seriously affected by recent disturbances.

The assistance package comes in the form of reductions in land and workshop rental, exemption from value added tax, import tax on production materials and fixed assets, interest rate reduction and extension of tax payment.

The total worth of assistance is as high as 110 billion VND (5.17 million USD) for Singapore’s Chutex International Limited Company,70 billion VND for Taiwan’s ASAMA Vietnam Company, more than 24 billion VND for Diamond Vietnam Co. Ltd. and the 11 billion VND for My Thanh Vietnam Co. Ltd., both also of Taiwan.

In addition, local commercial banks have rescheduled the payment of more than 90 billion VND in debts for 8 enterprises and cut the lending interest rate for 28 companies.

The provincial Department of Natural Resources and Environment also cancelled the inspection of natural resources and environment in all affected companies and firms.

Earlier, insurance companies paid in advance 114.7 billion VND (5.4 million USD) in insurance for 113 affected businesses.

Binh Duong is among some localities where disturbances erupted on May 13-14 during workers’ rallies against China’s illegal dispatch of its oil rig Haiyang Shiyou – 981 in Vietnam’s continental shelf and exclusive economic zone.

Some individuals incited others to destroy the property of foreign firms, the State and private domestic businesses, and acted against law enforcement officials, disrupting social order and business activities.

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