BUSINESS IN BRIEF 17/9 Highway construction costly in Vietnam Construction of highways in Vietnam is found 1.5-2 times costlier than in other Asian nations like Thailand, Malaysia, China and Indonesia partly due to slow implementation resulting in price escalation. Many projects have run behind schedule because of sluggish site clearance. One of them is Thang Long Highway which broke ground in 2005 with the total capital of VND5,379 billion. Site clearance problems have made the project’s implementation too slow and rocketed investment cost. It spends around VND250 billion to build a kilometer of the highway now, up from VND180 billion in 2005. Two years later, the Ministry of Transport had to increase the Thang Long project capital from VND 5,379 to VND7,527 billion. And another is Cau Gie-Ninh Binh Highway which was projected in 1999 and approved in 2005 due to design issues.The delay caused investment capital rocket from VND3,734 billion to VND8,974 billion for every 50 kilometers of the road. HCMC – Trung Luong Highway costs US$9.9 million per kilometer. The project's initial investment capital was VND6.5 trillion, which has been adjusted to VND9.8 trillion. It is expected to cost US$18.3 million for building of a kilometer of HCMC-Long Thanh-Dau Giay and US$28.2 million a kimometer of Ben Luc-Long Thanh Highway while a highway kilometer is reported to cost US$8 million in the US and US$6 million in China. According to Nguyen Xuan Thanh, director of Fulbright Economics Teaching Program in Ho Chi Minh City, one of reasons is that highway construction in Vietnam is dependent on loans. Official Development Assistance funded projects are using experts, consultants, contractors as well as machines and equipment of ODA suppliers. As a result, construction costs are usually higher than practice. Weak project management can also slow down the projects’ progress and escalate related costs, he said. After inspecting highway projects, Minister of Transport Dinh La Thang has said that weak terrain makes construction of highways 3-5 times costlier than normal roads. VN looks to lift shrimp industry Shrimp-processing firms will not be allowed to operate if they use less than 10 per cent of their own raw materials, the Directorate of Fisheries has proposed. The aim is to improve quality of shrimp exports, it has said. The remaining 90 per cent of the raw materials for the shrimp processors would be supplied through consumption contracts authenticated by Government agencies, according to the proposal. The Directorate of Fisheries is drawing up a draft managerial plan for the production, processing and export of brackish-water shrimp in the Cuu Long (Mekong) River Delta. According to the Directorate of Fisheries, by the end of last year, the Cuu Long River Delta had about 596,000 ha under shrimp farming, accounting for 91 per cent of the country's total brackish-water shrimp-farming area. The region produces about 431,570 tonnes of brackish shrimp a year, but the output has met only 60-70 per cent of designed capacity of shrimp processing plants in the region. Due to raw material shortage, many processing plants have had to operate under their designed capacity, with many of them having to import raw materials from other countries, it said. Viet Nam has nearly 200 enterprises involved in processing and exporting shrimp with a combined processing capacity of nearly one million tonnes of products a year, as of the end of last year. Only a few firms have invested to develop their own material sources. Most shrimp processing plants have bought shrimp from traders who purchase them from farmers. The directorate said collecting shrimp from various small sources had resulted in inconsistent quality, making it hard to monitor chemical residues and trace the origin of the shrimp. In addition, unhealthy competitive practices in purchasing materials, and in processing and exporting, had affected the prestige of Vietnamese shrimp in the world market. The draft proposal requires shrimp export firms to register export volume, quality and price with authorised agencies under the supervision of the Ministry of Agriculture and Rural Development (MARD). Firms will not be allowed to sell their products lower than the floor price set by MARD's agencies in each market. If firms are found offering selling prices lower than the set price or selling poor quality products, they will be strictly punished, or be suspended from exporting. Under the draft project, shrimp farmers must follow farming regulations set out by MARD. The Directorate of Fisheries' project also aims to have all planned shrimp-farming areas in the Cuu Long Delta apply Vietnamese Good Agricultural Practices. The directorate is now collecting opinions for the draft. External capital needed in struggle to resolve bad debts A temporary source of capital outside Viet Nam's banking system is needed to resolve the rising problem of bad debts, according to experts. At a seminar on restructuring banks and resolving bad debts which was held here last Tuesday, experts also said the current policies of the Viet Nam Asset Management Company (VAMC) were too restrictive to solve the problem. Dr. Tran Du Lich, a member of the National Assembly's Economic Commission, said efforts to solve the problem have so far gained some ground but restrictions remain. Lich noted that bad debts worth VND184 trillion (US$8.638 billion) have been paid since 2012, but economic difficulties have since given rise to more bad debts. Figures from the State Bank of Viet Nam show that since its creation in July 2013 till August 20, 2014, the VAMC bought VND56 trillion ($2.63 billion) worth of bad debts from credit institutions but sold only VND1.4 trillion ($65.727 million) of these debts. The modest sales showed that the VAMC's policies and resources remain restricted. Lich suggested that VAMC improve its financial status by either increasing its charter capital, using the Government's foreign loans or issuing bonds. A capital source outside the banking system needs to temporarily pump funds into the system to resolve bad debts. The VAMC's VND500-billion ($23.474-million) charter capital is too modest to resolve the bad debts that have currently reached billions of dong, Lich added. Nguyen Duc Thanh, director of the Centre for Economic and Policy Research, said the Government couldn't use the State budget to resolve bad debts as the budget deficit was large. Thanh suggested that the Government use around VND100 trillion ($4.72 billion) earned from the sale of State-owned enterprises' assets to resolve the debts. The Government should grant more rights to the VAMC and apply special policies on dealing with mortgaged assets to better resolve the problem. Experts also urged the Government to withdraw capital from State-owned groups and corporations early so that the SBV could represent the State in holding the capital. Petrolimex currently holds 40 per cent of PG Bank's charter capital while Electricity of Viet Nam holds 16 per cent of An Binh Bank, and PetroVietnam holds 52 per cent of PVcomBank's charter capital. The restructuring of the banks can be implemented only when the SBV holds the capital, experts said. The VAMC plans to buy bad debts worth US$5 billion by the end of this year, said General Director Nguyen Huu Thuy. Speaking at a real estate conference organised by Auscham in Ha Noi on Tuesday Thuy told domestic and foreign investors that VAMC has so far bought debts worth nearly $3 billion, reported infonet.vn. There are not only bad debts but also ‘good' assets. Thuy clarified VAMC's functions and tasks, adding that just as it happens in many foreign countries, the volume of bad debts increases during an economic crisis. To solve this problem, the establishment of VAMC was essential, even though the operation models in various countries are different. In Viet Nam, VAMC does not buy bad debts with funds from the State budget but had issued bonds in the initial stage. At that time, a number of organisations had thought it was a misconceived idea. However, after 13 months of operation, this model has proved to be a ‘creative' method. The company currently owns about 40 factories in various sectors including paper, seafood, agricultural products, ports, industrial parks and urban area. This is a good opportunity for the investors to participate in the real estate market, said Thuy. Rubber exports predicted to fall The nation's rubber industry will ship an estimated 1 million tonne of products abroad by the end of the year, earning US$1.8 billion to $2 billion in the process. According to the Department of Processing and Trade of Agricultural, Forestry, and Fishery Products and Salt Production, these exports, however, would represent a year-on-year fall of 10 per cent in volume and 23 to 30 per cent in value due to a drop in the global demand. Meanwhile, the global supply of rubber has significantly increased as countries have expanded their cultivation areas in response to the 2012 period of high rubber prices. That has also contributed to the fall in export prices since the beginning of this year. Head of the department Nguyen Trong Thua predicted that rubber prices would face a downward trend in the long term. Thus, competition between exporting countries would increase and importers would prefer rubber with stable quality. Currently, the price of Vietnamese rubber is much lower than that of other exporting countries such as Thailand, Indonesia, and Malaysia due to its low quality. Up to 548,000 tonnes of rubber were exported over the past eight months, bringing the country $989 million in revenue. This was a fall of 9.8 per cent in volume and 31.9 per cent in value year on year. China and Malaysia continue to be the two biggest consumers of Viet Nam's rubber. However, China's imports decreased by 21 per cent in volume and 41 per cent in value, while Malaysia's imports fell by 14 per cent and 40 per cent in volume and value respectively. Meanwhile, the domestic rubber production for 2014 was forecast to reach 980,000 tonnes, up by 3.2 per cent year on year. At a recent conference on rubber production, experts said that it was time to promote restructuring of the rubber industry in order to develop the sector in a sustainable manner as well as to increase the export value. HCMC showcases power technologies at global exhibition Electric and Power Viet Nam, the country's premier exhibition in those sectors, will open on September 17 at the Sai Gon Exhibition and Convention Centre in HCM City. There will be 104 foreign companies from Germany, Denmark, US, Korea, Turkey, Taiwan, and other countries and territories at the fifth biennial event, showcasing diverse power engineering technologies and products. They include ABB, AKSA power, and member firms of the Korea Electrical Manufacturers' Cooperative. Two conferences will be held on the sidelines. The first, organized by VINALAB, will be on ISO50001 Energy Audit requirements, and the second, held jointly by the Instrument and Control Society of Singapore (ICS) and Total Asset Management Systems Malaysia (TAMS), will be on new power plant technologies and operational excellence case studies. Industry veterans such as Kwong Kok Chan, general manager of SenokoPower and president of ICS, and Halim Osman, managing director of TAMS, with a combined industry experience of over 70 years, will impart their experience and knowledge to delegates at the ICS/TAMS power engineering and management seminar. Electric And Power Viet Nam was first held in HCM City in 2006 and it has since grown to become Viet Nam's most comprehensive power and electric solutions trade event that seeks to position itself as a technology marketplace in support of the country's growing grid and power infrastructure needs. The three-day exhibition will be organised by the Hong Kong Exhibition Services Ltd and its local partner, the VCCI Exhibition Service. Textiles and garments top exports again Textiles and garments regained the top ranking among Viet Nam's exports from the processing and manufacturing sector in August 2014. Figures from the Ministry of Industry and Trade showed that export revenue from textiles and garments increased by 0.2 per cent from the previous month to nearly US$2.2 billion. Exports of mobile phone and components, the country's biggest export revenue earner in the past two years, placed second with $1.9 billion. The figures helped bring the sector's export value in the first eight months of the year to $13.65 billion, a 19.7 per cent year-on-year increase. The industry's export earnings are expected to achieve a 10-per cent growth rate to $23 billion this year. However, the Viet Nam Textile and Apparel Association (VITAS) warned that a number of thorny problems, particularly the procurement of raw materials, must be overcome to achieve the anticipated growth rate. Dang Phuong Dung, VITAS general secretary, said that in spite of the high turnover, the industry's added value and quality remained low because of its reliance on imported raw materials. Domestic suppliers can meet only one per cent of cotton and 20.2 per cent of cloth demands for the sector. With several free trade agreements between Viet Nam and foreign partners in the works, the sector is under pressure to develop its domestic raw material sources and modernise production models in order to raise its products' added value and quality. Le Tien Truong, Viet Nam Textiles and Garment Group (Vinatex) general director, said local businesses had accumulated experience and developed a highly-skilled workforce following several years of sub-contracting. They should now shift to a modern production model to manufacture products of high added value and quality, Truong added. Hoa Binh benefits from foreign-invested projects Foreign investment projects in the northern province of Hoa Binh have made substantial contributions to the State budget while creating jobs for more than 10,000 local labourers, according to the Director of Hoa Binh Management Board of Industrial Parks, Tran Van Phuc. Hoa Binh province currently is home to 22 foreign-invested projects worth 350.3 million USD. Japan and the Republic of Korea together account for 19 projects, including a 75 million USD automobile part factory invested by Nissin and a 36 million USD aluminium plant of Almine group. Most recently, HNT Vina Co. Ltd., from the RoK, officially opened a 20-million-USD factory that manufactures built-in cameras for mobile phones in the beginning of this month. The facility has a capacity of of 180 million units per year and employs 2,000 labours. Park Seong Kon, General Director of HNT Vina factory, said Hoa Binh is a good choice for investment, where his business received great help from the authorities in terms of investment procedures, infrastructure and human resources. Hoa Binh is working to improve its governance ability and competitiveness in order to continue to draw foreign direct investment (FDI).- Investors see great opportunities in Quang Ninh Investors, both foreign and domestic, have been flocking to the northeastern province of Quang Ninh as it is expected to be an international urban area by 2050, the English language news portal VietNamNet Bridge reported on September 10. The province is one of the most attractive destinations for real estate developers thanks to its great advantages for tourism development and local authorities’ desire to encourage investment in the service sector. Quang Ninh became even more attractive recently when the provincial authorities announced a plan to build it into an international urban area by 2050. A special economic zone, Van Don, will be set up there in the future, while a casino project has been put into discussion. Thai Amata Group is reportedly moving ahead with its plan to build a hi-tech industrial and urban zone in Quang Ninh with investment capital of up to 2 billion USD. This is expected to be a 7.8 hectare complex, comprising a high-technology park, free trade area, research & development centre, educational establishments and urban area. The Quang Ninh provincial authorities have requested the investor to submit the detailed plan for approval and investment licensing, slated for September. IPP Group and the partners from Australia on June 10 visited to seek investment opportunities in Van Don, where they plan to build duty-free shops. The US-based ISC Corp has also expressed its willingness to invest in a 7.5 billion USD recreation complex with a casino on Tuan Chau Island in Ha Long city. Meanwhile, Quang Ninh’s authorities have called for investments in a series of huge projects, including a recreational complex with a casino, capitalized at roughly 4 billion USD. While foreign investors have drawn their projects on paper, domestic investors have been more confident about their investments. Tuan Chau Group of renowned businessman Dao Hong Tuyen has planned a series of big projects in the fields of tourism, trade, hotels, amusement parks, marinas and golf courses. The company recently signed a credit contract with LienViet Post Bank on funding the international marina and Smart City projects worth hundreds of millions of dollars. Meanwhile, Syrena Vietnam, a subsidiary of Bim Group, is going to kick off Little Vietnam, a project in the Ha Long Marina Urban Area. Vingroup, owned by Pham Nhat Vuong, the only Vietnamese dollar billionaire, has also landed in Quang Ninh with Vincom Center Ha Long project. It comprises four floors and one basement with total floor area of 37,240 square metres. Sources said Vingroup is also considering developing a resort with 5-star hotel in Ha Long city on an area of 4.96 hectares. Sun Group has asked for the provincial authorities’ help with three big projects, including a coastal amusement park, an eco-tourism complex on Minh Chau – Quan Lan Island and a hot spring resort in Cam Phacity. A senior executive of Bim Group said the group can see great potential in Quang Ninh which is considered as a golden land for tourism & resort development. Lack of foreign language skills disadvantages Vietnamese firms As more Vietnamese people are able to go abroad for tourism, only a few enterprises attend foreign exhibitions and trade fairs in search of business opportunities. Many foreign enterprises have lined up to register for international business events. For example, the Food Ingredients Asia (Fi Asia) 2014 conference is scheduled to take place in October in Jakarta. It is expected to attract around 450 enterprises as well 13,000 participants from the region and around the world. However, according to the organisation board, only two Vietnamese enterprises have registered for the event. Many experts have mulled over the reasons for this. Rungphech ‘Rose’ Chitanuwat, marketing director of UBM Asia, a leading exhibition organiser in the region, said that along with Fi Asia 2014, there will be several other seminars to offer an opportunity to introduce food products to major markets and discover the newest business trends, especially in ASEAN nations. "With a population of around 90 million people, Vietnam boasts great potential development for the food and beverages industry. The exhibition is expected to provide participating enterprises with a chance to promote their products and set up relationships with their potential partners,” said Rose. Concerning the reasons why there are only two Vietnamese enterprises registering for the event, she said, “With 18 years experience in organising FI in Jakarta, we have noticed a trend of more Vietnamese people going abroad for tourism instead of for business purposes. We realise that lack of foreign language skills is a big barrier for them, making it difficult to communicate with other participants." According to Rose, in order to encourage Vietnamese enterprises to attend the exhibition, the oganising board would have to provide them with return air tickets, accommodation and other per diem expenses. They also set aside funding to organise field trips for foreign companies who are interested in business opportunities in Vietnam, including visits to milk and beer factories in Vietnam. “We also encourage Vietnamese enterprises to arrange interpreters to facilitate communication when attending such events,” she noted. In order to support enterprises that could not participate in the event, the organisation board has also held seminars to connect them with foreign partners. They will also provide them with international directories specialising in enterprises operating in the food and beverage industry. Dao Van Ho, director of the Ministry of Agriculture and Rural Development’s (MARD) Agricultural Trade Promotion Centre, said Vietnamese enterprises are not aware of the importance of market strategy. When they take part in certain trade promotion meetings, their focus is usually on short-term sales and entrance fees, forgetting about the long-term benefits of PR and marketing. Techcombank to sell huge bad debt to VAMC Techcombank plans to sell VND1.5-1.8 trillion worth of bad debt to Vietnam Asset Management Company (VAMC) this year. Speaking at an award ceremony in HCMC on September 9, Do Tuan Anh, acting general director of Techcombank, said the lender is actively selling bad debt to VAMC. Since early this year, the bank has sold around VND800 billion worth of bad debt on book value to VAMC, he said. Last year, Techcombank offloaded bad debt totaling around VND2 trillion, making it one of the most active banks since the Government launched a major bad debt settlement scheme. Anh said VAMC is an important channel of the Government’s bank restructuring plan. Before VAMC’s establishment, Techcombank had set up a bad debt handling team to facilitate debt trading with VAMC Besides, VAMC has settled over VND400 billion worth of bad debt thanks to support from VAMC. Both sides have cooperated to help customers improve their business situation. In the first six months of this year, the bank saw its total assets and basic safety indexes improving. Its pre-tax profit in January-July met 85% of the target for the whole year, Anh said. According to Techcombank’s audited financial statement, its total assets stood at VND171 trillion at the end of June 30 with total chartered capital of over VND8.8 trillion. Its pre-tax profit was VND949 billion compared to VND878 billion in 2013. The bank now has over 7,000 staff serving 3.4 million individual customers and nearly 87,000 corporate clients. Techcombank on September 9 received 10 awards from four international magazines in the finance and banking sector, including “Best Internet Bank Vietnam 2014”, “Best Retail Bank Vietnam 2014”, “Best Customer Service Bank 2014” and “Best Commercial Bank Vietnam 2014” from Global Banking & Finance Review. The bank also won three accolades from Asian Banking and Finance and three other awards from Finance Asia and Corporate Treasurer.   In the year to date, VAMC has bought around VND15 trillion worth of bad debt. The firm has plans to buy at least VND70 trillion of bad debt in 2014 compared to the VND41 trillion purchased last year. New board will address freight surcharges The Viet Nam Maritime Administration plans set up a management board to deal with extra freight fees applied to Vietnamese exports and imports by foreign shipping companies. At a conference on Wednesday, head of the administration, Nguyen Nhat, said that at present there was no agency in charge of solving issues. Recently, many Vietnamese enterprises have complained about what they describe as unreasonable surcharges being applied to goods. At least 10 kinds of surchages are being applied, such as terminal handling charges, container imbalance surcharge and a port congestion surcharge. These fees have reportedly soared by around 20 to 30 per cent over last year and were imposed without warning. This has placed a heavy burden on import and export enterprises. This has led the Maritime Administration to ask the Ministry of Transport to set up a management board as soon as possible. The decision has received support from ministries, sectors and freight enterprises. Tran Anh Son, deputy director of the Ministry of Industry and Trade's Competitiveness Management Department, said that Vietnamese enterprises were suffering. He cited the port fee as an example. Foreign shipping companies usually choose the port which offers the cheapest price, but do not pass on any savings to enterprises. Different ports have different lists of additional fees, and enterprises sometimes have to pay more. Phan Thong, general secretary of the Viet Nam Shippers Association, said that Viet Nam enterprises were not told the differences between fees and additional fees, thus they usually suffered losses when signing contracts. At present, Vietnamese import and export enterprises lack an agency that can protect them, and the shippers' association and other authorised agencies offer little support. Eighty per cent of the freight market is controlled by foreign shipping companies. At present, Vietnamese enterprises have no choice but to pay all the charges to assure the delivery of their goods. This was why State management and consultancy of maritime transport was necessary, he added. Experts have suggested it is necessary to examine additional fees on some routes, which are said to be much higher than the real costs. They have also suggested foreign shipping companies to publish a list of fees and additional fees on different routes to comply with Competition Law. Lenders fail to jumpstart sluggish borrowing in August Vietnamese banks are likely to promote lending programmes that hopefully will help them to either unleash idle capital or boost the sluggish credit growth toward the end of the year. Viet Nam's credit growth in August was an estimated 4.5 per cent, well below expectations in the light of the government's target of 12 to 14 per cent growth in credit for 2014. State Bank of Viet Nam Deputy Governor Nguyen Thi Hong expected credit growth to reach 10 per cent by the end of the year, but expressed the hope that it would exceed this figure. Given the minimum 10 per cent rate, banks still need to add 5.5 per cent to make it up. "Capital demand may increase in the last few months of the year when businesses get busy, preparing for Tet festival," said Cao Sy Kiem, chairman of the management board of DongA Bank. "However, a 12 to 14 per cent target is very difficult to achieve." "The 10 per cent target is only achievable if the government's programmes to bolster the total demand are laid out clearly with every single effective step and taken seriously, while banks and enterprises are able to work cooperatively to pump and absorb capital," Kiem said. Some bankers said the competition was likely to become tougher that would keep all lenders on their toes. DongA Bank, which achieved 4 per cent credit growth in the last eight months, now aims to provide loans to borrowers from rural and agricultural businesses, private sector and households who evidently have high capital demand, good capital utilisation and low risk of bad debts. Sacombank earlier this week launched a priority package of VND2.5 trillion (US$118 million) for importers, exporters, and those in aquaculture, pharmacy, gasoline, transport, tourism, textile and garment, shoes, electronic components, food and consumer goods sectors. The minimal lending rate is 7 per cent in the first six months. One of the big four banks by assets, Vietcombank has just announced a VND3-trillion ($141.5 million) credit package, with the lending interest rate set at 7.99 per cent per annum. MaritimeBank offers VND1 trillion ($47 million) loans to Ha Noi-based companies at a borrowing cost of 7 to 8 per cent per year for short-term credit and 9 to 11 per cent for mid and long-term loans. Tran Xuan Quang, CEO of SME Banking at Maritime Bank, said that banks were always willing to help enterprises to overcome economic difficulties. However, enterprises themselves needed to improve their financial management to get their money's worth. HDBank has made a similar move by giving VND1.5 trillion ($70.7 million) to individuals, and for consumer purposes and production plans, and by setting aside VND5 trillion ($235.8 million) for small and medium-sized enterprises. ABBank has joined the race by offering personal loans worth VND1 trillion ($47.07 million) at 8.5 per cent for the first 12 months. LienVietPostBank announced to lend VND2 trillion ($94.3 million) for various terms at interest rates starting from zero per cent. Under the current circumstances, bankers expect an improvement in the total demand, purchasing power and employment rate, which are important factors to bolster businesses and production. Opportunities abound for Indian real estate firms Opportunities await foreign investors, including Indian real estate developers, in the real estate and construction sectors of Viet Nam. Doan Duy Khuong, vice chairman of the Viet Nam Chamber of Commerce and Industry (VCCI), made this assessment at a meeting with the representatives of 55 Indian real estate companies in the capital city yesterday. The VCCI and Marathi Bandhkam Vyavsayik Association (MBVA) organised the meeting. Khuong told the representatives that domestic enterprises were seeking capital to continue projects delayed during the gloomy period of the domestic real estate market. The Government's strong commitment to help investors speed up the implementation of their projects by further removing barriers in administrative procedures, as well as challenges in land tax and compensation, were expected to create more chances for investors, including those from India, he added. Mr. Sudhir Darode, the MBVA president, cited advanced construction technology, abundant financial capacities and experienced partners as the advantages of Indian enteprises, which could serve as an effective supplement to the Vietnamese real estate industry if the enterprises of the two nations could find a common voice. Sharing Darode's view, Tran Ngoc Quang, general secretary of the Viet Nam National Real Estate Association, said many domestic real estate companies paid increasing attention to the hunt for foreign partners in past years. Quang expressed hopes that the meeting would open up a new page for the two business communities to share opportunities and establish links of co-operation. The Vietnamese property market has attracted a large amount of foreign direct investments (FDI), accounting for 21 per cent of the nation's total FDI. There are a total of 427 foreign-invested property projects in the country with a total registered capital of US$51 billion, ranking second after the processing industry. Decision guides investor protection funds The Ministry of Finance is drafting a decision that will compel securities and fund management companies to set up investor protection funds this year. The funds will compensate investors if their interests are damaged by technical flaws or misconduct by employees at these companies. Reassuring investors that their interests are safeguarded against market malpractices is crucial for the development of capital markets. However, Viet Nam still lacks a clear investor protection scheme. In the past, wrongdoings by employees at several securities companies caused heavy financial losses to investors. However, they had no place to find help. The 2007 Securities Law stipulated that securities and fund management companies must buy occupational liability insurance and set up investor protection funds. However, no such funds have been set up. Moreover, only two brokerage firms out of the country's 91 securities and 41 fund management companies have bought occupational liability insurance, and none has set up an investor protection scheme, according to a recent Ministry of Finance survey. Companies said they were unsure where to extract the money from (revenue or earnings) or how to compensate investors, as they lacked guidance on how to set up the funds. The draft decision sets out detailed regulations on these issues. Companies will set aside a maximum of 5 per cent of their annual brokerage revenue to set up the funds. If the fund balance is equal to 10 per cent of company charter capital, they will not need to extract more funds. Companies must extract the funds by March 31 every year, with director boards determining the specific amount. Insured investors can receive compensation if they possess signed investment contracts with securities and fund management companies as well as documents that prove their losses and legal rights for compensation. The State Securities Commission will supervise the establishment and use of these funds. ANZ extends travel credit card to Viet Nam The Australian bank ANZ has launched an ANZ Travel Visa Platinum Credit Card in Viet Nam, targeting professionals and affluent customers with evolving travel needs. Viet Nam is the fourth market in Asia, after Taiwan, Singapore and Indonesia, where the bank is offering this travel card. Holders' spending via this travel card will receive bonus points, and at a certain point, their points can qualify them for free tickets for Vietnam Airlines, Singapore Airlines or Cathay Pacific Airways, among other promotions. HanesBrands shifts production to Viet Nam HanesBrands Inc., an American clothing brand, has decided to outsource its production facilities to Vietnam and close its underwear factory Cartex Manufactura in Costa Rica in November in a bid to maximise profits. ElFinanciero.com, a business news site, quoted Director of Cartex Manufactura Mauricio Brenes saying that the shutdown aims to reduce production costs as the company sourced fabric from suppliers in China, near the Vietnamese border. The shutdown after four decades of operating in Costa Rica will make 1,250 employees lose their jobs, adding to the country's 10,000 unemployed due to multinational corporations outsourcing to cheaper production sites in the last five years. Vietnam Airlines promotes VN tourism in Italy The national flag carrier Vietnam Airlines hosted a conference in Italy on September 11 to promote Viet Nam's destinations and the country's potential for tourism development. Representatives from Vietnam Airlines introduced Italian travel agencies to preferential treatment that they will enjoy when organising tours to Vietnam on its flights from Europe. Due to no direct air route between Viet Nam and Italy by Vietnam Airlines, Italian tourists can fly to Viet Nam from Milan or Rome via Paris or Frankfurt. Food Association signs deals to purchase rice from farmers As part of a pilot programme to guarantee outlets for rice, the Viet Nam Food Association's 16 member companies have signed contracts with farmers in the Cuu Long (Mekong) Delta who have pooled nearly 13,000ha for the large-scale rice fields project. The companies will buy up the grain harvested from this year's summer-autumn crop in An Giang, Tien Giang, Long An, Kien Giang, Soc Trang, Dong Thap, and Hau Giang provinces and Can Tho city, according to the Ministry of Agriculture and Rural Development. The ministry's programme follows the issue of a circular to assist implementation of the Prime Minister's Decision 62 on encouraging both development of agriculture and creation of large fields and consumption of grains grown. With the summer-autumn rice crop nearly fully harvested, the companies have already bought the rice grown on more than 9,920ha out of the 13,000ha, or 80 per cent. They paid VND100-120 a kilogramme higher than market prices, the ministry said. Speaking at a meeting held in Long An on Monday (Sept 8) to review the programme, Le Duc Thinh, deputy head of the ministry's Cooperative Economy and Rural Development, said the 80 per cent rate is higher than the average rate under such contracts in the region. He was referring to the fact that 101 companies that have signed contracts with farmers with a combined area of 77,420ha have only bought rice grown on around 42,600ha, or a little over half. Even this represents an increase of 25 percentage points from last year, Thang said. The companies blamed the low rate on several causes, including farmers breaching their contracts when rice prices are high and their own low financial and infrastructure capabilities. Ngo Thanh Van, deputy director of the Long An Food Company, said his company has signed contracts with farmers for six rice crops so far and has bought 60-70 per cent of the grains harvested. But this time the rate was only 30 per cent because rice prices increased and farmers refused to sell to the company in violation of the contracts, he said. Pham Thai Binh, director of Trung An Company Limited based in Can Tho, said if the companies offer higher than market prices, traders cannot compete with them. If the rate of buying is low, the companies should look at themselves and not blame traders, he added. Nguyen Thanh Truyen, deputy director of the Long An Province Department of Agriculture and Rural Development, said their lack of infrastructure and large harvests mean many companies are unable to buy all the contracted rice, forcing farmers to sell to traders. Since 2010 farmers and companies have been co-operating to develop large-scale rice fields. Farmers who participate have managed to increase yields by 0.2-0.7 tonnes per hectare and earn VND4-6 million (US$190-285) more per hectare than normal. Companies benefit by not having to depend on traders and also getting high-quality grain. Companies sign the contracts either with rice co-operatives or individual farmers. Before the 2014-15 winter-spring crop the ministry plans to have farmers with nearly 91,700ha of large-scale fields tie up with companies, 17,700ha more than during the last winter-spring crop. Viet Nam urged to encourage growth of support industries Viet Nam's support industries remain underdeveloped in spite of Government directives, with only 27.8 per cent of industrial spare parts and accessories coming from domestic enterprises. In contrast, domestic enterprises in Thailand provide 60 per cent of industrial parts and accessories while those in China provide 50 per cent. Nguyen Mai, president of the Viet Nam Association of Foreign Invested Enterprises (VAFIE), also told participants of a seminar on the development of Viet Nam's support industries here yesterday that the added value of domestic products remained low. Specifically, the added value was 35 to 40 per cent for garments and textiles, 30 per cent for footwear and 30 per cent for electronics. Foreign direct investment (FDI) enterprises manufactured most of these products, noted Mai. "This is happening because there is no policy for the priority development of some national support industries for large-scale productivity. The policy for support industry development has not created linkages between FDI and domestic enterprises," Mai said. He added that models of vertical and horizontal linkages have not been formed to improve the competitiveness of national products. The VAFIE president also remarked that this presented an opportunity for Viet Nam to review and focus on the development of the support industries, an important concern of provinces. In addition, some high-tech giants like Samsung, Nokia, Canon and Intel were moving their factories to Viet Nam and searching for suppliers from support industries to reduce production costs. He said the country should ensure a transfer of technology from foreign investors to improve domestic production while upgrading the Vietnamese people's management and innovation skills. Figures from the Ministry of Planning and Investment showed that Viet Nam has attracted around 17,000 FDI projects with a total registered capital of more than US$243 billion. Of these, an estimated $120 billion was disbursed capital from 101 countries and territories. In recent years, a remarkable increase was seen in FDI to Viet Nam's electronics industry from such countries as South Korea, Japan and Taiwan. "FDI enterprises have played an important role in turning Viet Nam into one the the world's top 10 electronics manufacturing centres in less than a decade, with production value of $40 billion last year. This is expected to be much higher in the future," said MPI Deputy Minister Nguyen Van Trung. South Korean FDI enterprises, including Samsung subsidiaries like Samsung Electronics, Samsung Display and Samsung Electro-Mechanics, have made South Korea the biggest foreign investor in Viet Nam's electronics industry, with total investment estimated to be more than $10 billion by year-end. Shim Wonhwan, general director of the Samsung Complex, said the mother company's investment in Viet Nam's electronics and support industries was around $8 billion. However, support industries in the electronics sector remain relatively backward, although Vietnamese businesses have been able to provide printing and packaging products for Samsung. "As a foreign enterprise in Viet Nam, Samsung's objective is not only to develop an important manufacturing facility but also to contribute to Viet Nam's economic growth," said Wonhwan. "Viet Nam's supporting industries are young but have huge hidden potential. We strongly believe that with the Vietnamese Government's practical policies and incentives, FDI enterprises and domestic suppliers will have much more opportunities to learn about each other, discuss and co-operate to promote supporting industries," he added. Wonhwan also revealed that Samsung always sought and opened up lines of communication and co-operation with domestic suppliers who meet quality standards, ensure timely delivery of and offer reasonable prices for products. This is being done to increase the number of domestic suppliers to Samsung's supply chain and benefit both Samsung and Viet Nam. He said companies who wanted to become their suppliers in spare parts and accessories should meet the requirements, including technology, infrastructure for research and development, quality control, ISO certification and environmental clearance. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR