BUSINESS IN BRIEF 9/7 HVN’s auto segment lacklustre Japanese Honda Vietnam’s car business has made little headway in the local market despite the company’s success in the motorbike trade. Last week Honda Vietnam (HVN) launched its ninth-generation Accord in the Vietnamese market at a price of VND1.49 billion ($70,900) per unit. Honda’s Accord model is one of the most successful HVN cars across the world with 19 million units sold by 2012 since its debut in 1976. In Vietnam, sales of the Accord have remained modest with just over 200 sold since the car’s local debut in 2011. While the company has attributed low sales to objective factors such as the Japanese earthquake and tsunami and serious flooding in Thailand in 2011 that affected supply, in fact HVN’s business in the Vietnamese market is unimpressive. Direct rivals of the Accord in the local market are the Toyota Camry, Mazda 6 and Nissan Teana, which posted solid sales figures last year. Accordingly, last year Toyota Vietnam sold 5,370 Toyota Camry models, VinaMazda (under locally-owned Truong Hai Auto JSC, or Thaco) reported 180 Mazda 6 units sold, meanwhile, less than 70 Accords were purchased. While other Japanese auto firms have scaled up efforts to roll-out luxury models such as Toyota’s Lexus and Nissan’s Infinity, Honda has put no effort into promoting its luxury segment in Vietnam. Industry experts have said that HVN’s success in its motorbike business is the reason it lacks enthusiasm for the car business. For the fiscal year running from April 1, 2013 to March 31, 2014, HVN’s revenue surpassed VND55 trillion ($2.6 billion), with 95 per cent reportedly coming from motorbike sales. For the period it sold 1.87 million units in the Vietnamese market. HVN’s CEO Minoru Kato was quoted as saying to local media that the car business was also a main company line, but that Vietnam’s auto market is minuscule and offers only modest sales, so HVN was keeping its focus on selling to higher value markets such as North America and Japan. Regarding the motorbike business, Vietnam is Honda’s fourth largest consumer and is always considered as one of the first markets in which to launch its latest models. HVN ventured into the auto business in Vietnam in 2005 when it invested $60 million in a state-of-the-art motor assembly plant. Its first sedan, the Honda Civic, came onto the market a year later in August 2006. Last year HVN sold a total 4,539 cars in the Vietnamese market, compared to 1,804 in 2012. In this fiscal year the company has set a target of 6,000 sales against 5,583 in the previous fiscal year. HCMC strengthens to collaborate with Vietnam representative agencies in foreign countries Ho Chi Minh City’s economy has overcomed step by step many difficulties and challenges to get great achievements in the previous times thanks to timely direct of central agencies and high ranking leaders affirmed Le Thanh Hai, Secretary of Party Committee of Ho Chi Minh City at the meeting with 32 Vietnam representative agencies in foreign countries on July 2. The central agencies in general and the Ministry of Foreign Affairs in particular have an important contribution in attracting foreign investment and strengthening trade cooperation between Ho Chi Minh City and other countries he said. Speaking at the meeting, Secretary Le Thanh Hai affirmed that HCMC is the country’s leading locality in organizing exhibitions, training courses in foreign countries, aiming to promote trade, investment, tourism and economic. Currently, HCMC is so interested in top problems like urban infrastructure, human resources management training, climate change and environmental pollution. Therefore, he hoped chiefs of Vietnam representative agencies in foreign countries will strengthen ties to city's departments, agencies in order to welcome foreign investors and Vietnamese communities abroad into Ho Chi Minh City market. Ho Chi Minh City will continue implementing the incentive policies for foreign investors into industrial parks, high-tech agricultural zones, he pledges. Zalora Marketplace joins local designers to boost online sales Zalora Vietnam, one of the leading online fashion retailers, on Tuesday unveiled Marketplace, a new platform for young talented designers and brands to introduce their products to customers. Apart from 100 designers who have cooperated with Zalora Marketplace since its soft opening in March, Zalora is looking for new faces to strengthen the new e-commerce site. Nguyen Phuong Anh, managing director of Zalora Vietnam, said that “with Zalora Marketplace, local fashion designers and retailers just need to sign up for an online store and publish their products’ images and descriptions and prices. Then we will handle the orders and delivery services to customers.” Some popular brands who have large transactions on the website are male fashion items of Kin Concept by veteran designer Nguyen Cong Tri, B21 (By Twenty One) by Truong Thanh Long and The Mike Style by the 24-year-old entrepreneur/designer Mike Nguyen. Some highlights for woman fashion are Coco Sin by two businesswomen/designers Vu Thi Kim Yen and Tran Thi Mai Huong, and the Denimista & Callia brand by businessman Vo Van Phuc and designer Kim Ngan. “Local young designers have impressed us for their creative products. Marketplace was born with an aim to help them introduce their creations to a larger market that they have dreamed of,” said Tyler Norwood, head of Marketplace Vietnam. Zalora Marketplace is connecting fashion designers to millions of customers nationwide who have traded on the website www.zalora.vn. Brands/retailers/designers can register to be a partner of Zalora Marketplace at http://marketplace.zalora.vn/sell-with-us/. The online fashion Zalora Group which is backed by German ecommerce group Rocket Internet has operated in Singapore, Malaysia, the Philippines, Thailand, Vietnam, Indonesia, Brunei, Hong Kong, Australia and New Zealand. Zalora Vietnam was launched in March 2012. It has had over 25,000 fashion items for men and women from over 300 local and international brands. Economic growth rate forecast at 5.7- 5,8%: Report The National Financial Supervisory Commission has forecast that economic growth rate will approximate 5.7-5.8 percent in a recent macroeconomic report in the first half this year. The commission’s forecast was picked up from the economic growth trend for the last two years and China’s illegal placing of Haiyang Shiyou 981 oil rig in Vietnam’s continental shelf. According to the report, Gross Domestic Product (GDP) growth hit 5.18 percent in the first half of 2014, mainly owning to service and industry and construction sectors. It was 4.9 percent in the same period last two years. Quarterly GDP growth has seen on the rise since the second quarter last year. The rate reached 5.6 percent in the second quarter this year, a 0.3 percent year on year increase. Industrial production has slowly improved, according to the commission. In the first half this year, the number of newly established companies fell 4.1 percent over the same period last year. The number of shut-down enterprises increased 16.2 percent. That is because of weak aggregate demand especially investment demand, said the commission. Foreign Direct Investment has slowed down, by anti-China riots in some industrial zones occurred in May. Core inflation has basically reduced since October last year and was curbed below 5 percent in the first months this year. The commission predicts that the inflation rate will be controled at about 5 percent this year if there is no fluctuation in prices of essential goods. Shrimp exports expected to soar this year Shrimp exports are expected to continue increasing in the second half of the year and raise the sector’s export value to US$3.8 billion this year, having gained a high value in the first half, said the country’s seafood association. Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said shrimp exports accounted for half of the country’s total seafood export value in the first six months. In the period, the seafood industry posted US$3.45 billion in export value, rising 24.2% over the same period last year, with US$1.8 billion generated by shrimp exports, Hoe said, citing a report by the Ministry of Agriculture and Rural Development. Given the sector’s good business performance in the first half and positive signs in Vietnam’s major export markets such as the U.S., Japan, South Korea and the European Union, the association expects that shrimp export turnover in the second half may be unchanged from the first half, taking the year’s total turnover to US$3.8 billion. Hoe said one reason for the increase of shrimp export is a sharp fall of supply on global markets, caused by the early mortality syndrome (EMS) in shrimp farms in major farming countries such as China, Thailand and India. Usually, importing markets boost their purchases in the last months of the year, Hoe said, adding that how much they will import depends on the quality of products of local suppliers. Steady output has not only brought good business results for shrimp exporters this year but also increased domestic prices of the product although the shrimp harvest is reaching its peak in the Mekong Delta. By the end of June, shrimp output rose 38.7% over last year in Tra Vinh Province, 25.5% in Kien Giang Province, 3.9% in Ca Mau Province, and 7.5% in Bac Lieu Province. Preferential loans for enterprises in districts 2 and 9 Thirty-six enterprises and two cooperatives in HCMC’s districts 2 and 9 on July 3 signed agreements with five banks to take out loans totaling VND893.5 billion, with interest rates from 8% to 11% per year. The banks involved in this business-bank connectivity program are VietinBank, Agribank, Vietcombank, Dong A Bank and ABBank. This is a key program to help enterprises in priority sectors access soft loans from banks. HCMC-based banks so far this year have signed 22 contracts with enterprises in 24 districts to lend them VND15.63 trillion. The beneficiaries include 643 enterprises, 40 family-run businesses and five cooperatives, said Nguyen Hoang Minh, deputy director of the HCMC branch of the central bank. Rice traders boost exports Local enterprises have increasingly purchased rice for export given positive signs of demand from importers that has led to a strong price hike in the domestic market. According to a source from the Department of Agriculture and Rural Development of the Mekong Delta city of Can Tho, in the year to June 20, Vietnam had signed contracts to export more than five million tons of rice, surging 13% against the same period last year. The Vietnam Food Association (VFA) reported that by June 20, its member enterprises had exported more than 2.8 million tons of rice. In the coming time, the association will have around 2.2 million tons shipped abroad under signed contracts. However, according to Can Tho agriculture department, VFA enterprises now only have around one million tons of rice left and therefore they will have to purchase at least 1.2 million tons of rice from farmers. Nguyen Thanh Tho, a rice dealer at Ba Dac wholesale market in Cai Be District of Tien Giang Province, said the tempo of rice buying by enterprises has accelerated significantly lately. “They snap up all rice we process,” he said. On the global market, prices of Vietnamese rice have increased by an average of US$10 per ton from early this week to US$415-425 per ton for 5% broken rice and to US$365-375 per ton for 25% broken rice, according to rice exporters in the delta. Lam Anh Tuan, director of Thinh Phat Co. based in Ben Tre Province, said given the increasing demand for rice, domestic rice prices have inched up VND400 per kilo within only one week. Prices of low-grade IR 50404 rice and material for 5% broken rice have increased by VND150 per kilo to VND6,750-6,850 per kilo and VND7,800-7,900 per kilo respectively in the Mekong Delta. IR50404 paddy and high-grade paddy prices have also leapt by around VND100 per kilo to VND4,300-4,400 and VND4,700-4,800 compared to early this week. Motor Show 2014 attracts 16 automakers, traders Some 16 automakers and traders will participate in Vietnam Motor Show 2014 from November 19 to 23 at Saigon Exhibition & Convention Center (SECC) in District 7, HCMC. Among the participating firms are nine members of the Vietnam Automobile Manufacturers’ Association (VAMA) and seven distributors of import brands. The former include Ford, GM, Hino, Honda, Mercedes-Benz, Suzuki, Toyota, Vinastar and Daimler Trucks, while the latter group includes brands such as Audi, BMW & Mini Cooper, Land Rover, Porsche, Nissan and Lexus. In this exhibition, many automakers will introduce their brand-new products along with advanced technology that will be launched onto the market in the near future. There will be accessories, spare parts, interior furnishing items, equipment for maintenance and repair, as well as related services for auto buyers at the event as well. Vietnam Motor Show has become an annual event for automakers and car enthusiasts and has extended its size year after year. This year’s five-day show is expected to attract 120,000 visitors. According to VAMA, the auto market in the first five months of this year grew significantly over the same period last year. Specifically, the total auto sales in the whole market reached 53,500 units, rising 33% year on year. VAMA predicted the car sales of 2014 at 125,000 units, a rise of 14% over last year.   Half of SC VivoCity occupied The opening of SC VivoCity commercial center in HCMC’s District 7 still has around one year to go but retailers have registered for around 52% of the facility’s net lettable area. Vietsin Commercial Complex Development (VCCD), the investor of SC VivoCity project, on July 3 signed memorandums of understanding with retail partners and enterprises. According to VCCD, a joint venture between Saigon Co.op Investment Development Joint Stock Company (SCID) and Singapore’s Mapletree Co. Ltd., 13 retailers and service providers had clinched deals to lease over 21,000 square meters at the center. SC VivoCity is expected to be inaugurated in the second quarter of 2015. For the retail sector, Saigon Co.op is partnering NTUC FairPrice to run Co.opXtra hypermarket there. SC VivoCity has also signed agreements with Starbucks, MOF, BreadTalk, ThaiExpress, Pepper Lunch and Shabu Ya to provide catering services. As expected, SC VivoCity with popular brands will become an entertainment, education and culinary destination for middle and high-income earners and foreigners in the city. Phua Kok Kim, Regional Chief Executive Officer of Southeast Asia at Mapletree and a board member of VCCD, said SC Vivo City has attracted a good level of interest from established retail brands. VCCD also on July 3 clinched a VND840 billion credit contract with Bank for Investment and Development of Vietnam for the ongoing financing of SC VivoCity. US agricultural businesses still await more ‘carrots’ Vietnam is finding it difficult to attract more US agricultural companies due to policy obstructions. Nguyen Viet Ha, managing director of US-backed major investment consultant BowerGroupAsia Inc, told VIR that although many US companies wanted to implement agricultural projects in Vietnam, they could not due to a series of impediments. “The number of US investors in the Vietnamese agricultural sector now is negligible,” she said. She said although foreign agricultural projects had theoretically been given big incentives like exemptions or reductions in corporate income tax, import taxes, land rental and many other priorities, clear and specific regulations on how to apply these incentives were still unavailable. “These incentives remain on paper only,” she said. “For example, although land incentives have been prescribed for foreign agricultural projects, the majority of these projects have found it very hard to find land. Many projects to plant forests and sugarcane have only found small parcels of land despite their investment certificates stating they should have received large plots,” Ha said. “Also, credit policies for foreign agricultural projects have become impractical due to very complicated procedures which lack transparency,” she continued, adding that the local agricultural sector was also characterised by small-scale production, amateurism and potentially large risks which made it difficult for investors to recoup their capital. In 2013, two major delegations of US investors came to Vietnam to seek investment and business opportunities. However, none of them expressed an interest in agriculture. In September 2011, 15 US food and agricultural companies came to Vietnam to explore business opportunities. They included US famous brand names like ACX Pacific Northwest, Case New Holland, Commercial Lynks, ConAgra Foods, Dantzler, Dragonberry Produce, Intervision Foods, John Deere, Novick Industries, PTC International, TRC Trading Corporation, Verdant Ocean, Wilbur Packing Company, and Zafi Beverages and Agriculture Technologies. They met with nearly 150 Vietnamese producers, importers, buyers, distributors, and investors to develop trade relationships. However, almost no investment deals were reported to have flowed from the meetings. Ha said that only animal feed maker Cargill and Monsanto were currently operating in Vietnam’s agricultural sector. TPP provides US firms with huge prospects Sesto Vecchi, a member of the AmCham Board of Governors and managing lawyer of Russin & Vecchi, says the Trans-Pacific Partnership agreement will help Vietnam’s economy develop, providing increased opportunities for American investors and exporters. The Trans-Pacific Partnership (TPP) will create a trading bloc that includes Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam. Although the specific chapters involving, for example, intellectual property, arbitration, human rights, business with state-owned enterprises, and environmental issues are being negotiated under a veil of secrecy, one sure effect is that the TPP will remove import tariffs among participating countries. According to claims by Harvard Professor Robert Lawrence, Vietnam stands to benefit more than any other country from the TPP. Countries in the TPP make up at least 40 per cent of the total market for Vietnam’s exports. The US alone, Vietnam’s largest export market, receives nearly 20 per cent of Vietnam’s total exports. In 2013, US imports from Vietnam reached nearly $25 billion while US exports totalled $5 billion. Some tariffs for Vietnam’s garment exports in other TPP countries are currently as high as 25 per cent. Vietnamese companies can expect export growth as a result of these significantly reduced import duties. Professor Lawrence anticipates Vietnamese exports to increase by more than 37 per cent by the year 2025, far more than those of any other TPP member. Vietnam’s economy is poised to take advantage of the TPP not just in terms of its exports, but it will also likely experience the largest gains of any other country in terms of GDP. Experts predict huge GDP increases by 2025. As Vietnam becomes wealthier and industrialised, US exports to Vietnam should also increase. The skills of Vietnam’s workforce and the country’s low business costs have already attracted garment and shoe investments for years. The TPP will allow Vietnam to build on this. Many investors are pursuing a China Plus One strategy, whereby investments in China are balanced by investments in Southeast Asia. The TPP will reinforce Vietnam as a natural choice for investors with such a strategy. Experts and analysts agree however that Vietnam will have to overcome several challenges. Although the country is a leading exporter of shoes and garments, its industries are focused largely on the final stage of production. In order to enjoy the benefits of reduced tariffs, the imports and materials used in production must come either from Vietnam or from other TPP countries. Currently, the majority of Vietnam’s inputs come from countries that are not members of the proposed TPP countries. The country-of-origin requirements are a hurdle but, at the same time, should encourage the creation of local supply chains. To take advantage of the reduced tariffs, Vietnamese and foreign investors will have to invest in Vietnam in order to create the industries necessary for it to meet country-of-origin requirements. Investors will want to seek opportunities to manufacture products that were previously imported. Such a strategy will benefit Vietnam in two ways. One is through the creation of broader domestic industries. Additionally, it will expand Vietnam’s exports so that it can take advantage of the TPP’s low tariffs. Vietnam is poised to experience rapid growth under the TPP. The US and Vietnam are likely to become increasingly significant to each other’s economies as barriers to trade fall and Vietnamese goods become relatively cheaper in the US. At the same time, as Vietnam’s economy becomes larger and more sophisticated, the opportunities for American investors and exporters will also grow. Net foreign purchases of Vietnamese stocks rises A sharp increase in net foreign purchases of local stocks in the first six months shows that the Vietnamese market is experiencing positive growth in the current difficult period. Foreign investors carried out net purchases worth VND7.084 trillion or $337.35 million of local stocks, which was 2.8 times more than in the second half of 2013 and 62 per cent more year over year. The best-selling stocks for foreign investors included Vingroup (VIC) and PetroVietnam Gas JSC (GAS) in the HCM City stock exchange and Vinaconex JSC (VCG), PetroVietnam Technical Services Corporation (PVS), VNDirect Securities (VND) and Kim Long Securities (KLS) in the Ha Noi Stock Exchange. On the other hand, foreign investors mostly sold shares of the Petrovietnam Fertilizer and Chemicals Corporation (DPM), the Hoang Anh Gia Lai Group (HAG) and Tien Phong Plastic JSC (NTP). Electronics stores a hit with buyers A majority of consumers in Viet Nam prefer large, modern stores when they shop for high-tech electronic products, according to analysts. As a result such stores have mushroomed in recent years, they said, pointing to chains belonging to famous firms like FPT, The Gioi Di Dong, and Vien Thong A. As soon as they appeared in the market, these shops became popular since they offered advantages that traditional retail shops did not – a large and varied range of models, convenient services, and reasonable prices — they said. As of June, FPT Corporation had 116 stores in many cities and provinces, including 13 in Ha Noi and 12 in HCM City. Nguyen Bach Diep, CEO of FPT Retail, said customers now demand friendly pricing policies and post-sale services, and so his company regularly changes sales strategies to compete in the market. "Eighty per cent of the products sold at FPT shops are priced equal to or even lower than similar products on the market. "In addition, the FPT shops are ready to counsel customers and offer convenient post-sales services in addition to gifts." The Gioi Di Dong (Mobile World Investment) Corporation is the largest mobile phone retail chain with nearly 200 large, modern shops nation-wide. A company spokesperson, who asked not to be named, said customers now pay much attention to customer care and promotions. "These modern stores can meet these requirements easily but traditional retail shops cannot. "Thanks to understanding customers' requirements, the company's stores have developed rapidly." Analysts said all of these retailers focus on pricing. As a result of its price advantage, last year The Gioi Di Dong sold 2.3 million Apple, Nokia, Sony, and HTC mobile phones, accounting for 20 per cent of their total market. Le Tam, director of Techone Mobile Supermarket, said people prefer to buy from authorised sellers because they can then be sure about the quality and warranty on products. "At small shops, customers cannot know about the origins of products," he said. Le Ngoc Phuong, a resident of Tan Binh District, said buying electronic products from large, famous stores means customers do not have to worry about quality. Besides, they often get preferential treatment at these stores, she said. According to data from the GfK Group, Germany's largest market research Institute, smart phones accounted for 70 per cent of mobile phones sold in Viet Nam last year, up 135 per cent from 2012. Tablet sales soared 250 per cent last year. Many foreign companies have been lured by the huge potential of the Vietnamese market, where 15 million people live in the two major cities of Ha Noi and HCM City, two-thirds of its 90 million people are aged below 30, and 30 million use the internet. Vietnam corn imports rise to boost animal feed production The country’s imports of corn in the first six months of the year exploded to 2.33 million tonnes valued at roughly US$600 million, the Ministry of Agriculture and Rural Development (MARD) has reported. Nguyen Xuan Duong, deputy director of the Animal Husbandry Department of MARD, also said the total demand for corn is forecast at 4.5 million tonnes for the year with an estimated price tag of more than US$1 billion. “The rising trend experienced by corn imports over recent years is primarily attributable to the increased demand for corn in the production of animal feed,” Duong said. “Vietnam lacks sufficient agriculture acreage to significantly expand corn production and must rely heavily on imports to meet the increasing demand.” It is also difficult for domestic farmers to compete with the foreign market price, Duong admitted, adding that corn is currently averaging US$245-248 per tonne, equivalent to VND5,800-5,900 per kilogram, while the domestic price hovers around VND6,200 per kilogram. Industry experts say to reduce corn imports, the agricultural sector must apply biotechnology to become more competitive and invest heavily in building corn preservation and distribution systems. Garment material imports rise 20% in H1 The garment and textile sector’s raw material imports jumped 20.6% in the first six months of the year toUS$7.7 billion, the Vietnam Textile and Apparel Association (Vitas) reports. Specifically, fabric imports were valued at US$4.63 billion, up 17.5% over last year, followed by accessories (US$1.5 billion, up 30.5%), and fibre (US$749 million, up 3.5%). The country’s total garment and textile export turnover reached US$10.4 billion in the first half of 2014, 18.4% higher than the previous year. Vitas statistics also show that import turnover of materials including fabric and fibre for export items hit US$5.9 billion in the reviewed period, an increase of 23.3% from a year ago. To achieve the export target of US$13-US$13.5 billion in the remaining six months of 2014, the value of material imports is expected to increase sharply to keep pace with export production. Finance Minister urges reform of tax procedures The tax authorities must continuously reform administrative procedures as there are many shortcomings, said Finance Minister Dinh Tien Dung at a conference in Ha Noi on Thursday. Dung said that though the agency had made progress in reforming its tax procedures in recent years, it still had a long way to go in order to match regional standards. He quoted the World Bank's 2014 report on business environment as saying that businesses in Viet Nam have to declare and submit taxes 32 times a year. An average of 872 hours are required to complete the procedures (it will take roughly 500 hours for tax paperwork if the time required for declaring and submitting social insurance, health-care and unemployment data is excluded). The time taken is 4.98 times more than that of the OECD bloc, 4.1 times more than the Asia-Pacific countries and 5.1 times more than the other ASEAN countries. Dung said that the tax authorities must try to cut down the time to roughly 200 to 300 hours. General Director of Taxation Bui Van Nam affirmed that the tax agency would improve the administrative procedures to create the most favourable conditions for firms. It would help firms cut costs, save time and boost production, which would contribute to increasing the tax collection, Nam said. At the conference, the General Department of Taxation also reported that the country's tax collection in the first half of the year was estimated to be VND335.09 trillion or US$15.73 billion, up 14.5 per cent year over year and equal to 53.7 per cent of the annual tax collection plan. The department reported that 46 of 63 cities and provinces nationwide in H1 met more than half of their tax collection plans. The tax agencies in H1 also collected an additional VND4.119 trillion or $193.38 million, up 80.8 per cent year-on-year after the audits of 20,983 enterprises. During the period, the agencies also inspected 557 firms which declared losses and showed signs of transfer pricing, and collected an additional VND580 billion or $27.23 million. To increase the tax collection in the second half of the year, deputy director of the HCM City Taxation Department Le Xuan Duong suggested that during periods of economic difficulties, the Government should grant tax payment extension to more firms to prevent their closure if the firms have committed to pay their tax arrears. Instant noodles market grows despite increased competition Inspite of the heavy competition between 50 domestic and foreign-owned instant noodles producers and manufacturers, Viet Nam's instant noodles market continues to flourish. Kinh Do Group, better known as a sweets manufacturer, announced at its shareholder meeting in June that its first instant noodles product would hit the market by September this year, and the company would utilise its existing 200 outlets to distribute this product nationwide. VnExpress quoted Kinh Do Group Deputy General Director Tran Quoc Viet as saying that confectionery remained the company's core business. However, penetrating the instant noodles segment, which would continue to grow significantly from now to 2017, would help the company attract more customers. Phan Thi Tuyet Mai, General Director of TMTM, a producer of supplement foods and nutritional drinks in HCM City, agreed that there was untapped potential in the local instant noodles market. After making its debut in late 2012, her company's Moringa noodles were now sold at Viet Nam's biggest retail distribution chains such as Saigon Co.op Mart and Big C, Mai told vnExpress, adding that her company's product was exported to European Union (EU) markets as well. Not just nutritional food and confectionery manufacturers, but large supermarkets have also realised the attractiveness of the instant noodles market. Two large supermarkets, Saigon Co.op Mart and Big C have launched their own instant noodles products. "Instant noodles are favoured by many Vietnamese. Thus, we wanted to create our own product selling at affordable prices for the domestic market, and consumption power of our product has been increasing slightly," Saigon Co.op Mart Deputy General Director Nguyen Thanh Nhan said to vnExpress. "If the market continues to run well in future, we plan to produce a new kind of instant noodles," he said. The latest report of the World Instant Noodles Association (WINA) revealed that Viet Nam is the world's fourth-largest consumer of instant noodles, purchasing roughly 5.4 billion packets yearly. The country ranks behind China, Indonesia and India in the annual consumption of instant noodles. However, when ranked on the basis of per capita consumption, it comes third behind South Korea and Indonesia. A Vietnamese person consumes an average of 56.2 packets per year while the figure for a Chinese person stands at 36 per year. Viet Nam's instant noodles consumption has grown at a consistent double-digit rate and the demand continues to rise in both urban and rural areas. In Viet Nam, the demand increased by nearly 24 per cent between 2008 and 2012, while the rate stood at 3 per cent in China and Indonesia and 5 per cent in South Korea and Japan for the same period. HCM City to host Thai trade fair Nearly 250 Thai companies will participate in the 13th Thai Product Exhibition (July 9-12) at Tan Binh Exhibition and Convention Centre, HCM City. The information was unveiled by the Department of International Trade Promotion under the Thai Ministry of Commerce and the Viet Nam National Trade Fair and Advertising Company. Household utensils, garments and textiles, jewelry, automobile and bicycle components, electronic equipment and spare parts will be displayed at 300 stalls. The exhibition will also feature a range of activities to promote bilateral trade and cultural exchange between Viet Nam and Thailand. Finance ministry mulls rubber export tax break The Ministry of Finance is considering scrapping the rubber export tax with the aim of removing difficulties for companies amid falling latex prices and declining exports. According to the Vietnam Rubber Association, the ministry issued a document earlier this week to invite opinions about cutting the rubber export tax to zero from the current 1% (applied on products coded HS 4001, 4002 and 4005) in response to the association's petition. The rubber industry has been facing difficulties during the past few years due to oversupply in the global market and plummeting international prices, which hit the local farmers and companies hard. Farmers in the central and southeastern provinces have reportedly cut down more rubber trees due to a significant fall in the natural rubber price. The price for a kilo of natural rubber latex decreased by half over last year's price to roughly VND15,000 or US$0.7. The Ministry of Agriculture and Rural Development statistics show in the first six months of this year, about 337,000 tonnes of rubber were shipped abroad, worth US$644 million, 12% lower year-on-year. The Vietnamese rubber prices declined between 2012 and June 2014 due to oversupply in the world market, thitruongcaosu.net repported. The average rubber export price in the first five months of this year fell 29% year-on-year to US$1,842 per tonne, 60% lower than the peak price in February 2011. In the world market, rubber prices reportedly hit low levels in recent months over concerns of muted demand, oversupply and declining prices. The Wall Street Journal, in an article published in May, reported that Thailand, the world's largest natural rubber producer, would start unloading its huge rubber stockpile estimated at 220,000 tonnes, leading to pressure on rubber prices. The article also said that the stockpiles in major rubber consumers like China and Japan were also at high levels. Foreign companies invest in Nhon Hoi wind power plant The Nhon Hoi Economic Zone (EZ) in Binh Dinh province on July 4 licensed two German and Swiss companies to jointly build a US$109 million wind power plant project. The license, granted to Vietterracon investment and management limited company (Germany) and Green Venture Invest AG (Switzerland), represents the first fully foreign-invested project licensed in Binh Dinh province. Spanning 600 hectares, the first phase of the project is scheduled to be fully operational and generating power in 2016, and the second phase in 2020. The plant is designed to have a combined capacity of 61.1 MW. Earlier, the Ministry of Industry and Trade had decided to add Nhon Hoi wind power plant project to the Power Development Master Plan of Binh Dinh Province for the 2011 - 2015 and 2020 periods. The Nhon Hoi EZ has to date attracted three licensed wind power plant projects with total designed capacity of 111 MW. Construction starts on expanded Thac Mo hydropower plant Renovations got underway on July 5 at the Thac Mo hydropower plant in Binh Phuoc province to lift its capacity from 150 MW to 225 MW. The expansion project aims to boost the plant’s operational capacity and ensure an adequate supply of electricity to fuel economic development in southern localities and increase reserves, especially during the flood season. Photo: VGP At an opening ceremony, Deputy Prime Minister Hoang Trung Hai asked Vietnam Electricity Group (EVN), investors, and contractors to ensure quality workmanship, a timely schedule and labour safety to meet the contract requirements and national and international standards. The total investment capitalisation of the project is estimated at VND1,500 billion. Of which, about 85% comes from the Japan International Cooperation Agency (JICA)'s official development assistance (ODA) loan and the remaining 15% is sourced from the EVN. The plant, being built on Be River, Bu Gia Map district, Binh Phuoc province, is expected to be put into operation after 36 months of construction. Vietnam, France businesses seek cooperation opportunities Vietnamese and French businesses examined the possibility of establishing partnerships in a number of areas at a recent meeting in the Val de Marne region. Bui Huy Son, head of the Vietnam Trade Promotion Department, introduced Vietnam’s investment climate and incentives to encourage foreign investment infows. French representatives presented the government’s support programmes for French and foreign companies operating in the country. Vietnamese businesses, including mining, garment and beverage producers, and their French counterparts directly exchanged views on demands and the possibility of cooperation in specific areas. French entrepreneurs showed their interest in business-investment opportunities in Vietnam, expecting to capitalise on the EU-Vietnam free trade agreement (EVFTA) due to be signed later this year. Elisabeth Rodriques, director of the economic development department of the Val de Marne region, said the local council supports and encourages its businesses to increase mutually beneficial cooperation with Vietnamese companies. She welcomed Vietnamese companies’ plans to establish trading centres in the region or partnership with local businesses. Foreign investors bullish on Vietnam market Foreign investors from around the globe are filled to the brim with optimism over Vietnam’s economic prospects and investment opportunities in the Southeast Asian nation, according to a recent survey. This buoyancy is most clearly evidenced by the announcement of RoK electronics giant Samsung to construct another factory in Vietnam with a total investment of over US$1 billion. Following, social disturbances at industrial zones in Binh Duong, Dong Nai and HCM City related to China’s illegal placement of Haiyang Shiyou-981 rig in the East Sea, many leading economists and market analysts were wary that it may spillover and have negative ramifications of the nation’s investment attractiveness. However, according to a recent survey conducted by experts at CBRE, the world’s leading commercial property and real estate services adviser, the effects have been inconsequential and those concerns have been laid to rest. In the first half of the year, CBRE reports foreign investment inflows into Vietnam’s real estate market surged 65% over the same period last year to an all time record high of US$629 million in 16 projects. The increase in mobile phone handsets and component exports is directly translating into an expansion of real estate investment as well as the industry, which is gradually replacing garments and textiles as the leading export product. In the first six months of the year, mobile phone handset and component export earnings tripled last year’s same period totals, peaking at US$11.7 billion. With the Trans-Pacific Partnership (TPP) Agreement poised to be signed early next year and the possibility of the Vietnam-EU Free Trade Agreement (VEFTA) being signed later this year, foreign investors are bullish on Vietnam, CBRE reports. The aforementioned trade pacts will have tremendous economic impact on Vietnam’s production and exports, especially for advantaged products, such as garments and textiles, seafood, and footwear. Currently, only 42% of Vietnamese products enjoy the EU's Generalised System of Preferences (GSP), but upon VEFTA coming into effect the number will burgeon, and manufactures are actively seeking opportunities to cash in by investing in Vietnam. Upon the signing of VEFTA, at least 90% of Vietnamese products will get zero tariffs. The revisions to the Land Law which came into effect as from July 1 have also positively impacted the real estate market, resolving a host of obstacles. New regulations are also being drafted, creating an equal playground more conducive for both domestic and foreign investors, facilitating foreigners’ investment in the nation’s real estate market. Vietcombank wins Asia-Pacific Awards For the seventh consecutive year, Vietcombank has been selected the Best Trade Bank in Vietnam in the prestigious Trade Finance Magazine Asia-Pacific Awards 2014 for excellence. At the awards ceremony on July 3 in Singapore, a spokesperson for Trade Finance Magazine described Vietcombank as a pioneer in the Asian banking industry, destined to become an international market leader. The honour is part of the annual Awards for Excellent granted to selected commercial banks and law and insurance firms that have developed an exceptional reputation in international trade and payment services. Awards are divided into four categories in line with four continents: Global Awards, EMEA Awards, Asia-Pacific Awards and Americas Awards. Can Tho City outlines international cooperation plans The Can Tho municipal People’s Committee on July 4 outlined long-term goals for heightened cooperation with foreign nations at a working session with Vietnam’s overseas representative offices. For Russia, the city is focusing on expanded cooperation in the fields of trade, investment, energy, and hi-tech agriculture production. Committee members suggested Vietnam’s representative office in France help facilitate cooperation in health care, education and training, transportation, and aviation. Meanwhile, Belgium has strengths in mechanical engineering, chemicals, textiles, and oil refining that are prime areas for cooperation the city would like to benefit from. The City is also calling on the Belgian Government for Official Development Assistance (ODA) on a US$10.4 million hospital project. The Committee hopes that Vietnam’s representative office in Belgium will serve as a bridge for the two sides to work together in the aforementioned fields. The US is a great potential trade partner of Vietnam in the key exporting areas of garments and textiles, seafood, footwear and rice for which the City is placing much hope of widening cooperation. Can Tho wants Vietnamese representative offices in central and south Asian nations to push for trade for the export of agricultural products and seafood. Financial sector urged to control fiscal policies amid East Sea tension The financial sector should strictly control fiscal policies aiming to achieve a 5.8% economic growth target this year, and remove difficulties in production and business activities. Prime Minister Vu Van Ninh made the statement at a conference in Hanoi on July 4 to review financial work, the state budget for the first half of the year and implement tasks in the remaining months. In the reviewed period, the financial sector contributed over VND413, 000 billion to the state budget, fulfilling 52.5% of the set plan, up 15.8% over the same period last year. Addressing the conference, Deputy Prime Minister Vu Van Ninh highlighted the Ministry of Finance’s outstanding results which have met the demand for socio-economic development and ensured national defence and security. In the complicated context of the   world economy, especially China’s illegal placement of drilling rig Ocean-981 in Vietnam’s exclusive economic zone and continental shelf, domestic production and business activities might be detrimentally affected in the coming time. In addition, the financial sector should advise local authorities to devise plans to cope with the negative consequences that may arise in dealing with Chinese traders and urged businesses to diversify their products to reduce over dependence on the Chinese market, Ninh said. Socialist-oriented market economy development reviewed Deputy Prime Minister Nguyen Xuan Phuc presided over a conference in Hanoi on July 3 to review the development of a socialist-oriented market economy. Phuc, a member of the Steering Committee for reviewing theoretical and practical issues during 30 years of the Doi Moi (renewal) process (1986-2016) and head of its Economic Group, spoke highly of the summarisation process with the serious involvement of agencies, units and localities. He underlined the need to clarify the definition of the socialist-oriented market economy model as well as the key role of the State-run economy. Private businesses serve as an important driving force for the economic development, he affirmed. At a similar event recently held in Ho Chi Minh City , Deputy Prime Minister Phuc said after 30 years of Doi moi, the major aspects of a socialist-oriented market economy have been put in place and gradually perfected. Economic and political reforms have helped the nation get out of the economic crisis and turn into a middle-income country. Vietnam is striving to fully integrate into the global market economy by 2018. More investment needed for developing tuna fish value chain Participants at a July 4 conference in central Nha Trang city stressed the need for the State to allocate VND5,770 billion for developing a value chain for tuna fish. Of the sum, more than VND2,700 billion will be used to upgrade 2,600 fishing vessels and build an additional 1,000 others. The profession of tuna fish exploitation was formed in Vietnam in1994, mostly in the three central coastal provinces of Binh Dinh, Phu Yen and Khanh Hoa. So far, the number of tuna fishing vessels has reached 3,500, with an output of 16,000 tonnes last year. Delegates suggested establishing a value chain of exportation, purchase, processing and consumption in order to ensure sustainable tuna exploitation and increased economic efficiency. Pham Ngoc Tuan, a senior official from the Ministry of Agriculture and Rural Development (MARD) said a closer link should be set up among farmers, processors, distributors and consumers, adding that a better value chain will benefit all concerned parties. A representative from the Directorate of Fisheries revealed a plan to upgrade and build tuna fishing vessels until 2020, with a focus on building a tuna trading centre in Khanh Hoa province and promoting post-harvest work. MARD Minister Cao Duc Phat said that to help local farmers earn more profits from tuna fish, it is essential to introduce them to modernised fishing techniques and facilities, as well as the latest technologies in fishing and the preservation processes. HCM City’s economy grows steadily Ho Chi Minh City’s economy has rebounded and grown steadily with high growth rates in gross domestic product (GDP), budget collection and foreign investment attraction in the first half of this year. These important results created a solid foundation for the city to fulfill socio-economic development targets for 2014, said the municipal People’s Committee Le Hoang Quan. The city made significant achievements in six months, with GDP grossing VND378,915 billion (up 8.2% over the same period last year), budget collection fetching VND121,910 billion (up 14.9%), industrial production index rising 5.6% and total retail goods and services turnover expanding 12.8% to VND312,147 billion. Vu Trong Hoa, Director of the municipal Institute of Development Studies (IDS), said the retail index demonstrates the uptick in the consumption trend, contributing to raising aggregate demand for the economy. The city’s exports were estimated at US$14.182 billion, a year-on-year increase of 5.72% while imports fell 2.2% to US$12.44 billion. Its trade surplus has helped improve the country’s trade balance, Hoa said. The June consumer price index (CPI) inched up modestly by 0.58% compared to the previous month. Low CPI and abundant goods and services demonstrate that the city has well implemented measures to contain inflation, and ensure the market law of supply and demand. Thai Van Re, Director of the Municipal Department of Planning and Investment, reported that by June 21, the city had granted licences to 169 new projects capitalized at US$967 million and approved another 53 operational projects registering to increase their capital by US$110 million. Overall, total investment capitalisation grew by 202% to US$1.08 billion. Current tensions in the East Sea have directly affected the city’s trade with China, especially for key products like rice, vegetables and fruit, cotton, garment and footwear accessories, fertilisers, and materials for production. According to municipal leaders, it is time for the city to restructure the business market, and improve internal strength. The city has devised nine solutions for fulfilling targets set for this year, including developing the support industry to minimise imports from one market, accelerating trade, investment, tourism and services promotions, and updating businesses on potential markets. IDS Vice Director Tran Anh Tuan said the city should quickly shift import-export markets to other ASEAN countries, instead of heavily relying on China. At a recent meeting with State President Truong Tan Sang, businesses reported they are gradually restructuring production, and seeking to use more domestic input materials. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR