BUSINESS IN BRIEF 24/7 Local businesses urged to boost exports to RoK Vietnamese enterprises should make greater efforts to accelerate trade promotion, improve production capacities and sharpen their competitive skills to further tap into the Republic of Korea (RoK). According to the Vietnamese Trade Office in the RoK, the Korea Rural Economic Institute recently quoted a survey conducted by Hankook Research Co, which said that besides going to small and medium-sized supermarkets, Korean consumers also bought food at hypermarkets as well as traditional markets. Leather products are produced at Ladoda Leather Company for export to markets, including the RoK They also preferred environment-friendly foods and were paying increasing attention to the country of origin of foods, with top priority being given to Korean-made goods. Thus, in order to successfully penetrate into Korean markets, Vietnamese exporters should ensure the quality of their products with a focus on food safety and hygiene as well as make their goods different from those already available in the market, the office said. According to the office, Korea is currently one of the world's leading importers. Last year, the country spent US$515.57 billion to import mainly crude oil, natural gas and coal along with machines, electronics and components. Steel and iron, as well as chemicals, were also imported. Meanwhile, Vietnamese exports to Korea have also experienced significant growth in the past few years – from US$12.9 billion in 2009 to US$20 billion in 2012 and US$27.3 billion in 2013, according to the General Department of Customs. In the first half of this year, Vietnam exported over US$3 billion worth of goods to the country. During the period, apparel took the lead in terms of turnover with US$746 million, followed by seafood with US$282 million and wood and wooden products (US$230 million). Computers and peripherals (US$156 million), mobile phones and components (US$164 million) and footwear (US$149 million) made up the rest of the exports. The department noted that exports of Vietnamese agricultural goods and foodstuff to different markets were also increasing. Trade experts attributed the encouraging results to efforts by domestic enterprises in exploiting the market and the positive influence of the ASEAN-Korea Free Trade Agreement, through which Korea offered tax incentives to goods imported from countries that are part of the pact. France helps Vietnam develop PPP projects The Vietnamese Ministry of Planning and Investment (MPI) has signed with the French Egis International- Adetef consulting joint venture a technical and financial assistance contract for implementing public-private partnership (PPP) projects. The US$3.5 million deal, co-funded by the Asia Development Bank and the French Development Agency (AFD), aims to promote the application of the PPP model in infrastructure development projects in Vietnam. Egis International, the provider of engineering services in urban development, and Adetef, the Agency for Technical International Cooperation of the French Ministries of Economy, Finance and Sustainable Development, will provide consultancy relating to strategy, finance, environmental and social issues for the MPI from now to 2018. At the signing ceremony on July 22 in Hanoi, Director of the Tender Management Department under the MPI Le Van Tang said he hopes the joint venture’s consultants will actively help speed up PPP programmes in the country. Fleur Pellerin, Secretary of State for Foreign Trade, Tourism Promotion and French Nationals Abroad of the French Ministry of Foreign Affairs and International Development, noted that the Vietnamese Government’s PPP programme will create big opportunities in infrastructure development, one of the most promising areas for French firms in Vietnam in the future. At a press conference in Hanoi on the same day, Fleur Pellerin also affirmed that her country will raise its provision of ODA for a metro construction project in Hanoi to 500 million EUR from only 320 million EUR it committed previously. Complex tax laws don’t deter foreign investment The complexity of Vietnam’s business tax climate is not impeding the attraction of foreign investment, and oddly enough, is appealing to a corrupt element of investors using complexity and legal loopholes to their advantage. A World Bank recent report on Vietnam’s business tax climate in 2013 reflects it took a typical foreign invested small business on average 872 hours annually to comply with the nation’s income tax laws, four times higher than the average for other countries in the Asia-Pacific region. However, in spite of the general consensus by leading economists that Vietnam’s business tax climate is said to be the poorest of all Southeast Asian region countries, foreign direct investment (FDI) keeps pouring into the S-shaped Southeast Asian country. Economists generally attribute the strong FDI inflow to Vietnam’s emerging status as the most politically stable country in the region, as well as its macro-economic stability and vast potential for economic growth. Speaking at a recent seminar, Central Institute for Economic Management (CIEM) Deputy Director Dr. Vo Tri Thanh, said foreign investors in Vietnam are expecting to earn high profits, and they view political stability and the country’s economic potential favourably. “Investors are not aiming to get involved in charitable programmes,” Dr. Thanh emphasised, adding “this is an advantage Vietnam has over other countries in the region”. However, Dr. Thanh pointed out a number of shortcomings in Vietnam’s FDI attraction, saying that the country needs to pay more attention to improving the competitive environment and the connectivity between producers and consumers. Vietnam is offering numerous investment incentives which includes a preferential tax policy that negatively impacts the national economy to the advantage of foreign invested firms. “Tariff incentives are only one factor to attract FDI businesses,” he emphasised, adding that, “Sometimes these incentives lead to corruption.” Professor Le Cao Doan from the Vietnam Institute of Economics (VIE), in turn echoed Dr. Thanh’s view and elaborated on the point that some foreign businesses are taking full advantage of Vietnam’s legal loopholes to increase their profits. “They are doing this by effectively taking advantage of complexities in the laws and evading paying the nation’s income tax altogether,” Doan said. In other words, the foreign invested firms make their profits in Vietnam but those profits get effectively allocated to other countries the firms operate in, where the income tax rates are lower. Another issue of concern is the lack of laws regulating environmental pollution. Other countries throughout the world carefully consider the green growth model and its enforcement. Vietnam has not yet paid proper attention to this issue and as a result, is suffering negative consequences caused by environmental pollution compounded by the utilisation of out-dated technology, Doan said. One peculiar aspect to Vietnam’s FDI attraction is that complicated procedures are not adversely affecting the flow of funds to Vietnam. Factually, many foreign investors don’t consider them as disadvantages, or alternatively, they find ways to make profit from the complexity. Instead of promoting production and increasing capacity, some foreign investors are eager to participate in corruption, or other schemes to corner the market and distort trade in order to make fast money. To support his assertions, Prof. Doan cited the Formosa project as a case in point, saying that many large investors are still injecting money in this project although there’s a rising inventory level in the local steel industry in the face of frozen property market. Vietnam is expected to lure more FDI to increase the country’s capital source and facilitate its economic restructuring process. However, the country is unlikely to achieve its set targets. “The national economy is still sputtering despite its positive outlook,” Doan added. According to him, those foreign invested firms who do not have a close relationship with State agencies will find it hard to run business, particularly small-and-medium-sized enterprises (SMEs). Thousands of businesses have gone bankruptcy due to tough competition. The country should take a step back and re-evaluate the offering of investment incentives, Doan suggests and the nation’s focus should be on modernising the nation’s production methods to avoid transforming itself into an outsourcing venue. Ca Mau licenses nine additional foreign aided NGO projects The People’s Committee of southern Ca Mau province has issued nine additional investment certificates for foreign aided non-governmental organisations (NGOs) projects with investment capital of over US$2 billion. The locality now has 23 organizations which are implementing 31 foreign aided NGO projects on health, education and training, natural calamity prevention and environmental protection with total committed investment capital of US$11.6 million in the 2011-2014 period. According to the provincial People’s Committee, these projects are being implemented effectively with the assistance of foreign partners. The province is currently formulating a plan to mobilise funding from NGOs in the 2014-2017 period. In addition, the locality has updated information, compiled documents and expanded relations to call on funding from the People’s Aid Coordinating Committee (Paccom) and a Vietnam Union of Friendship Organisations (VUFO) southern representative office. HCM City to tighten energy labeling rules Inspectors from the Ho Chi Minh City Department of Industry and Trade and market control officials have plans to levy administrative fines on manufacturers and importers of home appliances and industrial devices that fail to meet energy labeling requirements, according to the Saigon Times Daily. Speaking at a workshop on energy labeling in HCM City last week, Luong Xuan Nhung, Deputy Director of the department’s energy management division, said the inspection team would check local enterprises from now to the end of this year. Since July 1, 2013, producers and importers of some home appliances and industrial devices have been forced to put energy labels on their products in accordance with the Law on Energy Efficiency and Conservation. Energy labeling can lead consumers to select energy-efficient products and limit the use of energy-inefficient products. However, no firm in the city has been fined for violating the regulation so far, Nhung said. In February, the department conducted a survey of 20 retail stores, traditional markets and supermarkets, taking 500 samples of six products - tubular fluorescent lamps, compact fluorescent lamps, air-conditioners, electric cookers, washing machines and electric fans. The survey showed that 68 percent of air-conditioners and washing machines followed the energy labeling regulations, followed by electric cookers with 50 percent, electric fans with 38 percent and lamps 28 percent. Most enterprises were found not to label their products, use wrong labels, import prohibited products or provide wrong details, Nhung said. Nguyen Hoang Linh from the General Department of Energy under the Ministry of Industry and Trade said that there had been nearly 700 enterprises registering to label electric devices. In fact, no firms in the country have been fined since July 1, 2013 and law enforcement forces have just warned a number of violators, Linh said. According to Government Decree 134/2013/ND-CP, enterprises are subject to the highest fine of 60 million VND for violating energy labeling rules. Huynh Kim Tuoc, Director of the HCMC Energy Conservation Center, said enterprises are still facing difficulties due to a complicated label registration process, slow goods clearance and poor capability in label certification. In addition, label certification fees for some products are still high. According to the Government’s Decision 51/2011/QD-TTg that provides a list of equipment and devices subject to energy labeling, some electric devices must bear energy labels from January 1, 2013. Then, the deadline was delayed till the end of June 2013. The list of devices and equipment required to be energy-labeled are household appliances and industrial equipment. Household appliances consist of tubular fluorescent lamps, compact fluorescent lamps, electromagnetic and electronic ballasts for fluorescent lamps, air-conditioners, refrigerators, washing machines, electric cookers and electric fans. Meanwhile, industrial equipment includes electricity transformers and electric motors. HCM City sees smallest monthly CPI gain Ho Chi Minh City saw the smallest increase in its consumer price index (CPI) in July when it expanded by only 0.12 percent from June, said the municipal Statistical Office on July 22. The figure added up to the local CPI’s seventh-month rise of 1.22 percent and yearly inflation of 5.47 percent. Four categories experienced a drop in their prices in the month, namely housing, electricity, water, and fuel (down 0.07 percent); beverages and tobacco (0.06 percent); education (0.12 percent); and culture and entertainment (0.34 percent). Meanwhile, price hikes were recorded in the categories of transport (up 0.4 percent); foodstuffs and restaurant services (0.25 percent); and garment (0.05 percent). Household utensils and equipment; postal and telecommunication services; and other goods and services followed the same rising trend, respectively by 0.03 percent, 0.01 percent, and 0.29 percent. In the meantime, gold and US dollar prices climbed 0.82 percent and 0.03 percent, respectively, from June. Medicine and healthcare service expenses remained unchanged. Mekong Delta targets US$2.6 bln in shrimp exports Exporters from the Mekong Delta are striving to rake in US$1.3 billion from selling shrimp abroad in the latter half of this year, bringing the year’s export earnings from the product to US$2.6 billion, or an annual rise of 2.2 percent. Breeding farms have been expanded by 600,000 ha raising mainly black-tiger and white-legged shrimps in Ca Mau, Bac Lieu, SocTrang, Kien Giang, TraVinh, Ben Tre, Tien Giang, and Long An provinces, according to the Steering Committee for the Southwest region. The breeders have been advised to focus on renovating farming techniques and applying environmentally-friendly models such as the Global Good Agricultural Practices (GlobalGAP) and VietGAP certificates to produce high-quality products for both domestic and foreign markets. In the first half of this year, they harvested 285,000 tonnes of shrimp, including 171,000 tonnes of black-tiger, which brought in US$1.26 billion from abroad sales. In 2013, Vietnam for the first time earned over US$3 billion from shrimp exports, up 36 percent against the previous year. With this achievement, the country secured third place among the world’s shrimp exporters. VC Corp to migrate all e-commerce sites to zamba.com VC Corporation, a major e-commerce firm, will migrate all of its websites to zamba.com under Zamba – Ecommerce Group. The new website, which was just launched, consists of several popular sites of VC Corp such as muachung.vn, rongbay.com, enbac.com, muare.vn, chonmua.vn and suma.vn. SohaPay.com, a free online payment site developed by VC Corp, also joins the group. It is expected that zamba.com will cater to a wide range of customers with different needs for online transactions. “In the second half of this year and next year, VC Corp will invest heavily in the e-commerce sector. VC Corp will boost the business on its own way,” said Nguyen Tuan, head of e-commerce at VC Corp. VC Corp is expanding its business by looking for and acquiring potential websites in other sectors. For instance, in 2012, the company took over an online food store called eat.vn at a cost of VND2.6 billion and employed the founders of the website to continue running it. FPT Group has also shown keen interest in the e-commerce sector by taking over the trading floor 123mua.vn of VNG Corporation in a bid to support its e-commerce site at sendo.vn to develop and attract more customers. Revenue of the e-commerce sector in Vietnam reached US$2.2 billion last year and is expected to double in 2015, according to the E-commerce and Information Technology Department under the Ministry of Industry and Trade. In the coming years, the sector will continue growing thanks to the rising number of Internet users in Vietnam. VC Corp now obtains annual revenue of an estimated VND500 billion and enjoys a growth rate of 150%, specializing in online advertising and e-commerce for Internet and mobile users. HCMC to tighten energy labeling rules Inspectors from the HCMC Department of Industry and Trade and market monitors have plans to levy administrative fines on manufacturers and importers of home appliances and industrial devices that fail to meet energy labeling requirements. Speaking at a workshop on energy labeling in HCMC last week, Luong Xuan Nhung, deputy director of the department’s energy management division, said the inspection team would launch an examination into local enterprises from now to the end of this year. Since July 1, 2013, producers and importers of some home appliances and industrial devices have been forced to put energy labels on their products in accordance with the Law on Energy Efficiency and Conservation. Energy labeling can lead consumers to select energy-efficient products and limit the use of energy-inefficient products. However, no firm in the city has been fined for violating the rules so far, Nhung said. In February, the department launched a survey into 20 retail stores, traditional markets and supermarkets, taking 500 samples of six products - tubular fluorescent lamps, compact fluorescent lamps, air-conditioners, electric cookers, washing machines and electric fans. The survey showed that 68% of air-conditioners and washing machines followed the energy labeling regulations, followed by electric cookers with 50%, electric fans with 38% and lamps 28%. Most enterprises were found to not label their products, use wrong labels, import prohibited products or provide wrong details, Nhung said. Nguyen Hoang Linh from the General Department of Energy under the Ministry of Industry and Trade said that there had been nearly 700 enterprises registering to label electric devices. In fact, no firms in the country have been fined since July 1, 2013 and law enforcement forces have just warned a number of violators, Linh said. According to Government Decree 134/2013/ND-CP, enterprises are subject to the highest fine of VND60 million for violating energy labeling rules. Huynh Kim Tuoc, director of the HCMC Energy Conservation Center, said enterprises are still facing difficulties due to a complicated label registration process, slow goods clearance and poor capability in label verification. In addition, verification fees for some products are still high. According to the Government’s Decision 51/2011/QD-TTg that provides a list of equipment and devices subject to energy labeling, some electric devices must bear energy labels from January 1, 2013. The deadline then was delayed till the end of June 2013. The list of devices and equipment required to be energy-labeled are household appliances and industrial equipment. Household appliances consist of tubular fluorescent lamps, compact fluorescent lamps, electromagnetic and electronic ballasts for fluorescent lamps, air-conditioners, refrigerators, washing machines, electric cookers and electric fans. Meanwhile, industrial equipment includes electricity transformers and electric motors. Substandard agriculture facilities increase As many as 35 of 100 production businesses in the agro-forestry-fisheries sector have fallen into category C this year, meaning they fail to meet hygiene and food safety requirements, a sharp rise compared to the 25 last year. The result was given in an inspection report on an agricultural business survey in the first half of 2014 released by the National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad) on July 14. In fact, to control and create a legal framework for the management agencies, the Ministry of Agriculture and Rural Development issued Circular 14/2011 on management of safety standards for such businesses. However, the situation has not improved. Therefore, the agriculture ministry has issued Directive 167/CT-BNN-TTr strengthening the inspection and supervision of agricultural material, seafood, farm and forestry product safety to prevent counterfeits and low-quality goods. The directive urges local authorities to map out plans and conduct inspections focusing on agricultural materials, including plant and animal breeding, plant protection products, veterinary medicines, growth stimulants, animal feed and fertilizers. Besides, the ministry has held thousands of seminars and conferences as well as issued pamphlets, brochures, and technical documents to promote the campaign. Banks still concerned about lending to SMEs Local credit institutions and foreign bank branches will remain cautious about lending to small and medium-sized enterprises (SMEs) in the third quarter of this year due to lingering risks, shows a recent survey conducted by the State Bank of Vietnam. Over 70% of the banks surveyed said the level of risk at all groups is average due to the ongoing difficulties and that risks would not be worse than in the previous quarter. However, lenders are not in the mood to lend to SMEs, joint stock companies, limited liability firms and private enterprises. Meanwhile, banks thought that credit for foreign-invested enterprises carries the lowest risk. They are also confident in State-owned enterprises, which are expected to make further improvements in the coming time. Though how to cope with bad debt remains a hefty challenge as the economy and the real estate market have shown little sign of recovery, over 80% of the banks interviewed said their ratios of bad debt to total outstanding loans would stay stable or fall slightly in the second and third quarters. Most credit institutions have maintained or reduced average product and service fees or are expected to continue doing so in immediate future. Around 44% of banks said this year they would focus on interest rate cuts as a measure for making their products and services more affordable. They said the move would not cause adverse impact but improve profit. The banking system’s credit growth was only 3.52% in the first six months, but banks expected this year’s 12-14% goal could be achievable. Therefore, service and product fee cuts are part of their strategy to boost credit growth in the final months of this year. In addition, 88% of banks projected that dong mobilization and lending rates would be stable or move down in the third quarter. Up to 40-50% of them expected a decline, especially in lending rates. Over 70% of banks estimated that 2014’s deposit and lending rates for Vietnam dong would drop by an average of 1.24 and 1.43 percentage points against 2013 respectively. Lending rates are projected to fall at a faster pace than deposit rates in the third quarter and all of 2014.    Formosa takes VND50 billion for damage in worker protests Hung Nghiep Formosa Ha Tinh Steel Co. on Saturday got a compensation advance of VND20 billion from insurance firms and an aid package of VND30.35 billion from Ha Tinh Province for its damage caused by the mid-May worker protests against China’s illegal placement of an oil rig in Vietnam’s waters in the East Sea. Of the VND20 billion, the insurers handed VND6 billion in cash to the firm and will give the rest in the next few days. Formosa, the Taiwanese developer of a huge steel manufacturing complex at the Ha Tinh Economic Zone, suffered heavily from the violent protests. In May and June, Ha Tinh’s Taxation Department refunded Formosa Ha Tinh more than VND1 trillion in value-added tax, said the General Department of Taxation. Recently, a delegation of the Ministry of Planning and Investment met with leaders of Ha Tinh Province and Formosa Ha Tinh to explain the Government’s additional privileges, and how to determine damage for compensation. At the meeting Formosa made an unprecedented proposal for setting up a special economic zone for its project and a special management unit under the Government Office, which made big headlines. The Government however turned down the proposal as the firm has received the most preferential treatment among foreign investors in Vietnam and because the country does not have any regulations on developing a special economic zone for a single foreign investor. Following the incident in mid-May, Ha Tinh Province set up an inspection council and examined damage at the affected enterprises to offer them timely support, according to the Ha Tinh Economic Zone authority. In his visit to Ha Tinh Province on June 20, the chairman of Formosa Group highly valued the province’s resolve to support the affected enterprises and pledged to turn out its first steel products in May next year. Pepper price reaches record high Price of black pepper in Chu Se Market in the highlands provinces surged to VND182,000 per kilogram, an increase of VND5,000 compared to previous time, said Le Sy Quy, Deputy head of the province's Department of Agriculture and Rural Development. The agricultural product is sold at VND185,000 per kilogram (US$ 8.7) in the southern province of Binh Phuoc. This is the highest price so far, bringing much profit to farmers. Price of black pepper hiked in the highlands provinces because there is not much pepper in farmers' stock. According to the pepper industry's forecast, the country's pepper output is likely to be 130,000 tons and pepper would reach US$1 billion to the revenue of the country's farm produce exports, with a total volume of 150,000 tons. If the forecast become true, this year will be likely to be the banner year of the sector with the highest turnover. Media Mart opens two electronics stores in Ha Noi, Thanh Hoa Media Mart Corp Vietnam has just officially opened two more electronics stores in Ha Noi and Thanh Hoa, bringing the total of its domestic stores nationwide up to 14. In Ha Noi, Media Mart store is located in Ho Tung Mau Street, covering an area of 1,000 meter squares. The 5,000 meter square store in the north central province of Thanh Hoa is set up in Tran Phu Street. During opening occasion, Media Mart is launching promotional program to its customers. Cuckoo Electronics -an appliance company of Korean has just opened Cuckoo shop in Phu My Hung of District 7 in HCMC. This is the first shop in Vietnam. Cuckoo manager said Cuckoo will obsolutely open more shops in big cities and provinces in Vietnam including Ha Noi, Da Nang .. Cuckoo Electronics are specialized in manufacturing rice cookers, humidifiers and kitchen appliance. It has manufactured kitchen appliance for 30 years. Cuckoo’s rice pressure cookers dominate 70 percent of the Korean market, with an annual production of 2.5 million units. VRA calls for latex exploitation cuts The Vietnam Rubber Association (VRA) has urged the individual and corporate owners of rubber plantations nationwide to scale down their latex exploitation as one of the measures to deal with falling latex prices. VRA said price declines on global markets have led to lower latex prices on the local market, forcing a number of rubber tree farm owners to reduce or even suspend their latex extraction since mid-May to cut costs. Many households in the Southeastern and Central Highlands regions have chopped down both old and young rubber trees in their plantations to plant other industrial trees and high-yield crops. Statistics from the Department of Cultivation showed 3,000 hectares of rubber tree has been cut and shifted to other industrial plants and crops as of June this year. VRA has worked with associations in other major rubber-producing countries such as Thailand and Malaysia to scale down latex exploitation and manage to peg their prices to those on global markets. Latex prices in Vietnam’s Southeastern region have dropped to VND35 million per ton, down VND2 million compared to last month. A latex trading firm said it is difficult to predict the natural latex price on the local market as it varies depending on global demand and prices. According to the Ministry of Agriculture and Rural Development, Vietnam posted export revenue of US$644 million from shipping 337,000 tons of rubber in the first six months this year, down 12% in volume and 33% in value over the same period last year. The ministry said the average export price of natural latex in January-May stood at US$1,842 per ton, down 29% compared to the same period last year. HCM City to get tough on housing projects The HCMC Department of Construction will force the investors of new housing projects to specify the implementation pace of components of their projects and those failing to meet this requirement will face punitive measures. The department’s move is to reduce the number of property projects moving at a snail’s pace in this economic hub of Vietnam. The department’s director Tran Trong Tuan told a question-and-answer section at the 14th session of the HCMC People’s Council last week that investors are required to clarify the ground-breaking and implementation schedules of components of their new housing projects as part of a licensing process for these projects in the coming time. “This is considered the investors’ commitment to their projects and those investors who fail to carry out their projects as pledged will face punitive measures in line with existing regulations,” Tuan said. Tuan added that officials of the department and districts have initiated an overall inspection into housing projects whose investment locations have been approved. The objective is to review the investment progress and infrastructure development at these projects to help the investors solve their difficulties in case of need and to impose fines on the violators. The department is expected to report the inspection results to the HCMC government very soon. The HCMC government reported that there are 1,386 housing projects occupying a combined area of over 11,770 hectares in the city, with the area of completed projects accounting for a mere 13%. The areas of the projects currently under construction and having been suspended make up 15% and 61.6% respectively. The city has canceled licenses and approved sites of 536 housing projects covering more than 5,390 hectares since Resolution 16/2012/NQ-HDND was passed by the HCMC People’s Council two years ago. Exchange rate hike pays modest gains Businesses say the appreciation of the US dollar by the State Bank of Viet Nam (SBV) in June has positively affected their businesses, although the benefits remain modest. On June 19, the central bank increased the dong-dollar interbank exchange rate by one per cent, after keeping it intact for one year, with one dollar currently equivalent to 21,246 dong, instead of 21,036. SBV Monetary Policy Department director Nguyen Thi Hong said the move was meant to support the nation's export profile and economic growth during the remainder of the year, as the demands of the economy were low and business performances remained difficult. "The banking sector is sharing its difficulties with us," said Bac Viet Steel Company director Tran Anh Vuong. "The recent adjustment in the exchange rate followed a road map and was transparent, and it is supporting enterprises very well." But Vuong said the impact that the change had on production and export was insignificant, except for such factors as wages and electricity prices, many other inputs were also affected by the dollar price. These factors accounted for 30 per cent of all inputs at his firm, so profits were limited. Further, CMC Joint Stock Company director Nguyen Quang Huy agreed that the move was good for enterprises in the current context, although the impacts were small. Nguyen Thi Lan, director of animal feed company Anh Dung Investment, said importers did not expect the exchange rate increase, though they had found themselves paying rising port service charges, as well as production costs, and had to recalculate their product prices. Meanwhile, economist Tran Du Lich said the adjustment was not a change in the SBV's exchange rate policy, as had been predicted. Rather, it followed the market supply and demand and was consistent with price developments in Viet Nam in past years. In recent days, when dong-dollar exchange rates tended to fall on the free market, the SBV raised dollar buying prices sharply at the regular exchange. This showed its consistent policy to maintain dollar prices and support exports, market observers said. Further, banking expert Nguyen Tri Hieu said the appreciation of the dollar was necessary, though the one-per-cent adjustment will not have any significant impact on the economy. This indicated the central bank's caution in implementing operational policies within the context that the economy still faced many challenges. More overseas investors flock to Binh Duong Foreign direct investments (FDI) in support industries of the southern province of Binh Duong showed a significant increase this year, according to the local People's Committee chairman, Le Thanh Cung. During the first half of the year, Japan's Tanaka Ai Viet Nam Co Ltd invested US$20 million in cosmetic production, and Taiwan's Lausdeo Viet Nam Co Ltd spent $18 million on battery component manufacturing. Another Japanese firm, Wonderful Saigon Electrics Co Ltd, also supplemented $210 million to enhance its productivity in making cameras for mobile phones and circuits for electronic devices. The increasing investments in support areas have had a positive impact on the development of major export industries in Binh Duong, said Cung. Domestic enterprises are now capable enough of supplying materials for sectors such as footwear, garment and textile, timber, paint and screws. These have helped increase the value of goods and improve competitiveness of enterprises, he added, noting that the province attained a trade surplus of nearly $1.3 billion in the first six months. Cung said the province will have a master plan for production material in connection with the development of support industries, in preparation for the Trans-Pacific Partnership free trade agreement, in the near future. This will create favourable conditions for the province while calling for investments, as well as ensuring sustained growth of industrial sectors. Binh Duong attracted $1.014 billion in FDI during the first half of 2014, exceeding its annual target of $1 billion. Riot-affected firm gets $1.4m payout The Finance Ministry and the central province of Ha Tinh on Saturday handed over a handsome compensation payout to Formosa Ha Tinh, a Taiwanese-invested company affected by violence that broke out following China's illegal installation of an oil rig inside Viet Nam's continental shelf in May. The People's Committee of Ha Tinh province gave VND30.3 billion (more than US$1.4 million) to the steel maker to help its subsidiary companies resume normal operations. Insurance companies also paid out VND6 billion to the company and more than VND14 billion will be handed over in the coming days after procedures have been finalised. Speaking at the event, Deputy Finance Minister Tran Xuan Ha reiterated Viet Nam's resolve to ensure a safe and favourable environment for investors. Chairman of Ha Tinh People's Committee Vo Kim Cu also promised that the province would create the best possible conditions for companies operating in Vung Ang Economic Zone to overcome difficulties and resume growth. Ha Tinh was among a group of localities where disturbances erupted on May 13, during which workers' rallied against China's illegal dispatch of oil rig Haiyang Shiyou – 981 in Viet Nam's exclusive economic zone. Particular individuals incited others to target and destroy property belonging to foreign firms, the State and private domestic businesses. Authorities denounced those who acted in defiance of law enforcement officials, disrupted social order and business activities. Authorities have since arrested and brought hundreds of rioters to trial. Last month, affected businesses in the southern provinces of Binh Duong and Dong Nai also received insurance payouts worth VND153.65 billion ($7.3 million). FECON database system to get boost The FPT Information System Company (FIS) will help FECON Foundation Engineering and Underground Construction JSC to improve its management capabilities with SAP Enterprise Resource Planning (ERP). The 18-month-long project was launched last Thursday in Ha Noi and will have a total investment of about US$2.5 million. In the first phase, between July 2014 and February 2015, the project will focus on building subsystems including finance accountancy, investments and loan management. In the four-month-long second phase, FIS will construct subsystems on custom information management, as well as on project and opportunity management. The last phase, from July 2015 to December 2015, will concentrate on the building of subsystems on research and development management, management of tools used for planning and reporting of management excellence. The enterprise's strategic director Dang Tuyet Thuong said that the decision to invest in ERP was made to improve its management capabilities, and to prepare resources for the development of the firm in the future. Booming bilateral trade with Turkey tops $738m in H1 Two-way trade between Viet Nam and Turkey reached US$738 million in the first half of this year, with $665 million from Vietnamese exports, according to the Ministry of Industry and Trade. During this period, Viet Nam exported cell phones and components, fibres, computers, electronics and components to Turkey, while importing machinery and equipment, pharmaceuticals, as well as chemical products. Local experts have said that there remained room for the two countries to further develop their bilateral co-operation. Meanwhile, Cong Thuong (Industry and Trade) newspaper quoted Vietnamese Trade Office as saying Turkey was willing to increase trade and investment relations with Viet Nam, and Turkish businesses were also prepared to accelerate promotional activities to seek more business opportunities in Viet Nam. Most industrial clusters lack wastewater treatment facilities Only 3% of 615 operational industrial clusters in Vietnam have invested in central wastewater treatment systems and the remainder let their tenants treat their wastewater or discharge it directly into the environment. The figure was released by the Pollution Control Department under the Vietnam Environment Administration at a conference on environmental treatment in HCMC last week. However, the situation at industrial parks (IP) is much better. The department said only 30 of 198 operational IPs nationwide have yet to build central wastewater treatment facilities and 21 others are in the process of constructing such facilities. The reason for a lack of wastewater treatment systems, according to the department, is that funds for environmental management and protection at industrial clusters and IPs have not been allocated efficiently and far lower than the number of local tenants. In HCMC, all the 15 IPs and export processing zones have central wastewater treatment facilities but 10 of them have automated monitoring systems installed at the sluices of these facilities as demanded by the HCMC People’s Committee. Embroidery firm expands to catering services Leo Ninh Khuong Co. Ltd., a member of the 2030 Businessmen Club under the Saigon Times Club, has expanded its presence from the embroidery to food catering sector. The company has just inaugurated Haha Sushi Restaurant in HCMC’s District 1. The company’s director Duong Hoan Tuyen said the target is to open one eatery every three months. The company looks to a chain of 40 restaurants in HCMC by 2019. These facilities serve foods with prices from VND25,000 per dish. All of the ingredients and materials for foods at the restaurants are Vietnamese agricultural products and seafood, including tuna of Phu Yen Province, salmon of Lam Dong and Lao Cai provinces, basa fish in the Mekong Delta, grape seaweed of Ninh Thuan Province, avocado of the Central Highlands, and sweet mango produced in Hoa Loc and other parts in the Mekong Delta. Vietnam, Israel enjoy fruitful trade ties Vietnam – Israel trade relations developed remarkably in the first six months of 2014, with bilateral trade jumping 53% year-on-year to US$426 million. Of the total, Vietnam’s export turnover to the country fetched US$261 million, according to the Ministry of Industry and Trade. Vietnam principally exported mobile phones and components (US$190 million), seafood products (US$22 million), and footwear (US$15 million) to Israel. It primarily imported fertilizer, machinery, and equipment from the Middle East nation. Currently, Israel is Vietnam’s fourth largest trading partner in the Middle East, trailing behind the United Arab Emirates (UAE), Turkey, and Saudi Arabia. In the coming time, the two sides will continue to implement cooperative mechanisms, introduce incentives, and exploit the two countries’ untapped potential, aiming to boost industrial production and increase trade exchange for mutual benefit. The two countries are scheduled to sign a free trade agreement (FTA) in late 2014, helping ease trade barriers and streamline complex administrative procedures. Addressing a recent Vietnam-Israel Commercial Committee meeting in Hanoi, Israeli Ambassador to Vietnam Meirav Eilon Shahar revealed Israeli is keen on expanding agriculture cooperation with Vietnam. She said agricultural cooperation will greatly support expanded business partnerships and expressed hope that the two governments will work closely to create the best possible conditions for the benefit of economic growth. Currently Israel is undertaking 16 investment projects capitalised at US$20.65 million in Vietnam, ranking it 62nd among foreign investors in the country. Kien Giang speeds up marine projects Southern Kien Giang Province will focus on administrative reforms and improve project management capacity to speed up marine economic projects, said vice chairman of the provincial People's Committee Le Khac Ghi. He said that priority would be given to projects on infrastructure development, including transport, seaport, storm shelters, growing sea products and processing. The province also wants to develop a project to mitigate the impacts of climate change and rising sea levels, environmental protection and efficient resource exploitation. In the last three years, statistics from the province's Planning and Investment Department show that provinces granted 340 projects to develop coastal and island areas with total investment of VND166.5 trillion (US$7.93 billion). The projects cover a total area of nearly 20,200 ha. On Phu Quoc Island alone, there are 112 projects with an area of 4,850ha and investment of more than VND135 trillion ($6.42 billion). Now, the province has 183 operational projects focusing on breeding, processing farm produce and seafood, transport system and tourism services. "There is potential to attract investors to sea-based projects," Ghi said, noting two projects on expanding water-supply companies Rach Gia and Ha Tien, the tourism-area projects of Hon Trem-Chua Hang, Mui Nai-Ha Tien, Bai Vong Port and An Hoa Culture Park. Ghi said that the province was facing difficulties because of poor infrastructure in coastal and island areas, particularly relating to transport, power and water supplies. Some projects were delayed because of time-consuming work like plan making, plan adjustment and cumbersome investment procedures, Ghi said. "Improvement project management capacity and administrative simplification are the key to speeding up projects," he said. Kien Giang emerged as an economic spotlight in the Mekong Delta in 2013, with an economic growth rate hitting 9.4 percent, ranking fourth among the 13 provinces and cities in the delta. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR