BUSINESS IN BRIEF 19/9 Farmers get help from Australian aid project Fruit farmers in the northwest will be able to improve access to markets in Hanoi, Ho Chi Minh City and overseas under a research project promoted by the Australian Government. This was revealed at the Launch of the ODA-funded Project by the Ministry of Agriculture and Rural Development (MARD) and the Australian Centre for International Agricultural Research (ACIAR) on September 16. "The project team will focus their efforts on identifying and developing new and inclusive markets and value-chain opportunities for temperate fruits," said Australian Ambassador Hugh Borrowman. He added that the large Australian fruit industry would share its extensive research and production experience with Vietnamese researchers and farmers. The project, which will run until 2018 with a total fund of AUD1.4 million (US$1.26 million), has four core missions. The first two are to evaluate nationwide consumers and markets, to correct the plans set by the Government and to improve the development of temperate fruits in the northwest. The other two core missions are to resolve obstacles limiting the development of markets and identifying points where intervention and change to the supply chain will improve access to domestic and overseas markets. "Development of temperate fruits is one of the major ways to reduce poverty in the northwest," Le Quoc Doanh, Deputy Minister of MARD said. He said there were several obstacles to the development of the industry - lack of information about customers' tastes and market drives, inefficient transport and limited knowledge by farmers about markets and technologies. Three northwest provinces, Lao Cai, Lai Chau and Son La, were selected to pilot the scheme because they are considered the most disadvantaged areas in Vietnam. For 20 years, Australia has invested in agricultural research and development in Vietnam through the ACIAR. Scientists from both countries have completed more than 130 projects in crop and livestock production, natural resources management, fisheries, forestry and agricultural research. Can Tho to host two int’l expos in Q4 The Mekong Delta city of Can Tho will host the Vietbuild 2014 International Exhibition and the Vietnam international Agriculture Fair in the fourth quarter of this year. The information was revealed by Le Thi Kim Thu, Director of the Can Tho International Exhibition and Fair Centre, at a press conference on September 17. Vietbuild 2014, which will take place from October 1-5, is expected to attract more than 200 businesses which will showcase their products such as construction materials and interior decorations as well as the latest technologies in the field at 450 booths. Germany – a potential market for Vietnamese exports Germany is considered Vietnam’s biggest trade partner in the Europe, accounting for 20% of the Southeast Asian nation’s total exports to the European Union, and a gateway to other EU markets. At a September 17 workshop in Hanoi, the Trade Promotion Agency (TPA) under the Ministry of Industry and Trade reported that two-way trade between Vietnam and Germany has flourished considerably in recent times, seeing a 7.5fold increase between 2010 and 2013 to nearly US$7.7 billion last year. In the first 7 months of this year, Vietnam’s exports to Germany rose by nearly 5% to more than US$2.8 billion. TPA Director Bui Huy Son said both countries have huge potential for stronger cooperation. As Vietnam and the EU are completing negotiations on a free trade agreement, accelerating Vietnam-Germany business connectivity will help deepen the two countries’ strategic partnership. Vietnam mainly exports telephone handsets and components, garments, footwear, seafood and coffee to Germany, while importing machinery, equipment, chemicals and hi-tech products from the European nation. Forum boosts Vietnam-Russia trade links The Vietnam-Russia Business Forum accelerated Vietnam-Russia relations, opening up both challenges and opportunities, Vice President of Russian Chamber of Commerce and Industry, Nhikolaievich Kurochkin told the forum in Moscow on September 16.   Russian Industry and Trade Deputy Minister, Yuri Slyusar in turn held that the presence of large businesses at the forum will offer more opportunities to further develop the strategic and comprehensive partnership between the two nations. For his part, Trade and Industry Minister Vu Huy Hoang stressed Russian businesses have had opportunities to invest in Vietnam and penetrate the ten ASEAN member states’ markets with 600 million people. He expressed hope that both sides will continue to promoting economic, trade and investment relations in accordance with the signed agreements under the framework of the recent Vietnam – Russia Intergovernmental Committee on economic, commercial and scientific - technological cooperation. During the forum, Vietnamese and Russian businesses also discussed advantages and prospects for future bilateral relations. Many businesses signed agreements, contracts and memorandum of understanding (MoU) to establish trade and investment ties directly in each other’s market. A delegation from northern Thai Binh province conducted a survey on the potential market for the first time and signed a MoU with Russia’s New Lujniki Company to export rice, farm produce and ceramic products. Ly Thai Hung, director of Hung Cuc Co, Ltd – a leading company for exporting rice in the Red River Delta said there are bright prospects for Vietnamese rice products and other foreign businesses in Russia which is a gateway to penetrate to the European market. He also unveiled a plan to expand to the retail market in Russia or provide goods to retailers In a recent interviewed granted to a VOV reporter on prospects for cooperative relations with Vietnam, Jamin Romen, New Lujnik  Company General Director said due to the recent US embargo, the Russian market lacks food resources  that  can meet by Vietnamese businesses. Solutions should be devised to bring agricultural products to Russia in the fastest way, as there exists huge potential for exporting farm produce to the market. Seafood companies attend int’l expo in Australia Seven seafood companies from the Mekong Delta province of Ca Mau are participating in Australia’s largest food industry trade exposition ongoing at the Melbourne Convention & Exhibition Centre from Sept. 15-18. This is the fifth time Ca Mau Seafood Processing and Service Joint-Stock Corporation has joined the Australian expo with the aim of stimulating export markets, said Lu Van Phe, the company’s marketing director. At the event, which has attracted more than 1,000 booths and over 24,000 visitors, companies are actively seeking joint venture partners through internet advertising and meetings bent on expanding operations in Australia, he noted. Nguyen Hoang Nam, Deputy General Director of Ca Mau Frozen Seafood Processing Import Export Corporation (CAMIMEX) in turn said his company is actively trying to drive more traffic to its booth with the use of flyers which are being widely distributed throughout the fair. For customers unable to attend to the event, the company will make arrangements to go to the customer’s office if necessary. The exposition has been organized since 1994 and it is now the largest annual food international exposition in Australia. Increase in aggregate demand needed for growth Signs of economic recovery in Vietnam have become clearer, as industrial production, especially processing and manufacturing, continued to grow. According to the newspaper, inflation since the start of the year has been restrained with an increase of 1.84 percent, while the prices of numerous essential goods remained stable. A range of other indicators have also seen positive signs. Vietnam’s industrial production index in the first eight months of the year increased 6.3 percent compared with the same period last year. The trading and service sectors saw higher year-on-year growth rates. Vietnam has gained a trade surplus of 1.7 billion USD for the first eight months of 2014. The nation’s total exports reached 97 billion USD in the first eight months, which was 14.1 percent higher than the same period last year. The nation’s total imports reached 95.3 billion USD, 12 percent higher than the same period last year. State budget collection equated to 68.8 percent of this year's entire collection target. Although the country’s macro-economy has maintained stability, aggregate demand showed a slow improvement, threatening the economic growth in the remaining months of the year. According to the National Financial Supervisory Committee, Vietnam’s core inflation in August was estimated at 3.34 percent, much lower than the overall inflation rate of 4.43 percent. The total retail sale of goods and services in the first seven months achieved a year-on-year increase of 11.4 percent. However, real purchasing power still grew slowly, as the consumer price index increased only 1.62 percent during the first seven months – the lowest level since 2006. Credit growth in August was an estimated 4.5 percent, below expectations in the light of the Government’s target of 12-14 percent growth in credit for 2014. The low aggregate demand is causing challenges in achieving this year’s gross domestic product (GDP) growth target of 5.8 percent. According to the Ministry of Planning and Investment, the country’s GDP in the first nine months of this year was expected to rise 5.54 percent. Therefore, in order to achieve the annual economic growth target, more effective measures should be devised to support aggregate demand. The implementation and disbursement of basic construction investment, especially disbursement of State budget and capital from government bonds should be speeded up. Urgent projects should be focused on and be completed on schedule. Disbursement of foreign direct investment (FDI) from the beginning of this year was estimated to touch 7.9 billion USD, an increase of 4.5 percent compared to the same period last year. Disbursement of Official Development Assistance (ODA) also increased sharply, especially in transport and energy projects. More drastic measures should be proposed to promptly tackle difficulties for projects with sluggish disbursement, contributing additional resources for investment and promoting economic growth.- Binh Duong grants investment licenses to 37 projects The People’s Committee of southern Binh Duong province on September 16 granted investment certificates for 37 domestic and foreign projects with a combined capital of 380 million USD. Almost projects focus on industrial production, food processing and electronic mechanics, which are in line with the province’s investment attraction policies. Binh Duong ranks third among other localities across the country in attracting investment from foreign countries. As many as 1.4 billion USD of foreign investment has been poured into the province so far this year, up 26 percent against the same period last year. In addition, about over 1,600 domestic firms are operating their projects in the locality, with the registered capital totalled 7.5 trillion VND (352.5 million USD). According to the provincial People’s Committee, Binh Duong is home to 2,344 foreign-invested projects with a total capital of 20,204 billion USD. It is the fourth locality nationwide after Ho Chi Minh City, Ba Ria-Vung Tau and Hanoi drawing total foreign investment capital that has exceeded 20 billion USD. The local authorities are paying attention to completing the development plan of supporting industrial areas, said Chairman of the provincial People’s Committee Le Thanh Cung. He added that Binh Duong has also promoted administrative procedure reform to remove obstacles for enterprises along with improving its investment environment.- HCM City’s industrial production sees growth The industrial production index of Ho Chi Minh City grew by 6.5 percent in the first eight months of this year, representing a year-on-year rise of 1 percent. According to the municipal Department of Industry and Trade, major sectors such as processing and manufacturing, electricity, and miming saw a respective increase of 6.5 percent, 6.2 percent and 3.2 percent. The results show that the processing and manufacturing industries hold a growing proportion in the city’s industry structure. The city plans to restructure these industries by focusing on processing and manufacturing and reducing the contribution of mining. In the remaining months of the year, city authorities hope to introduce more new policies and incentives to aid businesses and improve the competitiveness of the city’s industries. 2016-2020 socio-economic development on focus The Party Central Committee’s Commission for Economic Affairs - a think tank in socio-economic matters - held a discussion in Hanoi on September 16 to collect officials and experts’ opinions on Vietnam’s socio-economic development from 2016 to 2020. About 100 delegates heard reports by three independent research teams from the Development Strategy Institute under the Ministry of Planning and Investment, the National Economics University, and the University of Economics and Business under the Hanoi-based National University. The reports project the regional and global economic outlook and impact on Vietnam, and suggest growth scenarios for the country and measures to implement socio-economic development in the 2016-2020 period. Participants gave feedbacks to matters mentioned in the reports such as the perfection of the socialist-orientated market economy, human resources training, infrastructure development, and short-term macroeconomic policies. The Commission for Economic Affairs this year is tasked with proposing scientific bases for the building of the 2016-2020 socio-economic development plan. Therefore, reviews on the country’s performance in the 2011-2015 period and predictions for the next five years are important for the work. Korean investors eye opportunities arising from new Construction Law Korean investors are seeking opportunities to expand investment in Viet Nam's construction sector following the implementation of the 2014 Construction Law, a conference revealed on Tuesday. The gathering attracted the participation of 25 Korean investors such as Daewoo, Lotte, Samsung, Hyundai and Hanshin to discuss opportunities presented by the new law. The Academy of Managers for Construction and Cities (AMC), International Co-operation Department under the Ministry of Construction and Korea Research Institute for Human Settlements (KRIHS) organised the event. Hoang Tho Vinh, Deputy Director of the Construction Activities Management Agency, said the 10-chapter law would take effect at the beginning of 2015 and replace the 2003 Construction Law. Vinh revealed that the law aimed to tighten the management of construction quality, ensure transparency in construction licensing and prevent planning overlap to enhance construction efficiency. Kim Kyungil of KRIHS said that South Korean investors with prior experience in Viet Nam saw new opportunities, explaining that new investment opportunities would arise from changes to the setting up, evaluation, approval and licensing of construction projects. He said that the Korean business community would continue to increase investment in Viet Nam in future. Nguyen Noi, deputy director of the Foreign Investment Agency under the Ministry of Planning and Investment, said Viet Nam's legal framework on investment and construction would help encourage investment from large firms with strong financial reserves and sophisticated technology. This would also help achieve the nation's foreign direct investment (FDI) targets. Noi added that Viet Nam should continue to improve its investment climate to attract more investment in the country's support industry and infrastructure sector. In addition, South Korean investments in green industries should also be encouraged, he said. Government figures showed that South Korea has so far invested in 3,930 projects worth US$32.845 billion. This makes South Korea the second biggest investor among more than 100 countries and territories with investments in Viet Nam. In the first eight months of the year, South Korea was the largest investor in Viet Nam, with a total capital of $2.47 billion or 34.1 per cent of total newly-registered FDI. Firms discuss winning consumer trust Business executives held a direct dialogue with national and international experts on how their companies can win consumers' trust and boost their credibility in the market at a forum held in Ha Noi yesterday. The issues they discussed at the CSR (Corporate Social Responsibility) Calendar Forum on Consumer Issues included making more Vietnamese select and trust local products, surviving the harsh competition in the retail market, and building a market where consumers trust producers. The forum was held as part of a new project called "From Global Compact to Local Impact! - Promotion of CSR among Vietnamese Business Community for Sustainable Consumption and Production (SCP)". The project is a joint initiative by the Office for Business Sustainable Development (SDforB) of the Viet Nam Chamber of Commerce and Industry (VCCI), the UN Industrial Development Organisation, and the UN Environment Programme. Funded by the UN One Plan Fund, it aims for synergies with the EU-funded Switch Asia policy module for the development of a national SCP action plan lead by UNEP as well as with the UN Global Compact Viet Nam Network under SDforB. The CSR Calendar Forum is engaging with the Association of Viet Nam Retailers and Viet Nam Environmental Administration. Other issues discussed at length were CSR and SCP - Together for Responsible and Sustainable Business; Draft national action plan on SCP and Environmental policy to support SCP; Overview of new CSR Project and consumers' issues; Sharing experiences on gaining consumers' trust in Vietnamese products; The UN Global Compact as a way to improve the trust in enterprises. "The CSR Calendar Forum is a good chance for enterprises taking part in the badly needed multi-stakeholder dialogues to better understand 6 core CSR subjects based on principal documents such as ISO26000 and UN Global Compact," Nguyen Quang Vinh, director of SDforB, VCCI, said. "Since 2007 Vietnam has become a local network of UN Global Compact aiming at supporting its members implement effective CSR in the country." Florian Beranek, chief technical advisor of the project, said: "Multi-stakeholder dialogues had become a kind of trademark CSR initiatives during the recently concluded EU funded VCCI – UNIDO project on CSR that helped improve the collective understanding of the needs, challenges, and business opportunities associated with each of the core CSR subjects. "Improved social performance is expected to enhance competitiveness and trade performance of the subject enterprises, reduce their environmental impact and resource consumption and improve their relations with stakeholders, including workers, communities, consumers and business partners." Dinh Thi My Loan, chairwoman of AVR, said: "Vietnamese enterprises are facing huge challenges of competitiveness. According to the WTO roadmap commitment, from January 11 next year foreign retailers are allowed to set up business with 100 per cent foreign investment capital, replacing the 50 per cent currently applied. "Viet Nam has witnessed big names such as Lotte (Korea), AEON (Japan) entering the distribution and retail market or planning for their participation in near future like E-Mart (Korea), Takashimaya (Japan), Auchan (France). "Hence, it is necessary for Vietnamese businesses to improve their strategies if they want to compete in the domestic market in the context of integration." To help businesses know more about CSR and to bridge international and national experts to understand enterprises as well as consumers needs and demand, a workshop titled "Gaining Consumers' Trust in Local Products and Services to Support Sustainable Consumption and Production" was held in the afternoon. A similar event will be held in HCM City on Friday. VN, Germany to boost economic co-operation Viet Nam and Germany are enjoying huge opportunities to effectively exploit each other's potential amid moves to speed up the forging of bilateral ties between the two countries. Bui Huy Son, head of the Trade Promotion Agency under the Ministry of Industry and Trade, made this observation at a conference in the capital city yesterday. Son also revealed that the Viet Nam-European Union (EU) Free Trade Agreement, which was expected to be signed by year-end, would further facilitate co-operation between the business communities of both countries. Bilateral trade between Viet Nam and Germany has developed significantly in past years in spite of global and domestic economic difficulties, increasing by 18 per cent to US$7.7 billion in 2013 and standing at $2.34 billion in the first four months of 2014. Viet Nam has exported a variety of products to Germany, including mobile phones and components, computers and electronic equipment, and garments and footwear, as well as coffee, seafood, timber products and handicrafts. Germany has exported to Viet Nam transport vehicles, equipment and machinery, as well as pharmaceutical and chemical products. Germany is now Viet Nam's largest trade partner in the EU, Son said, adding that it was also a gateway for Vietnamese companies to penetrate deeply into the huge and lucrative European market. Marko Walde, chief representative of German Industry and Commerce in Viet Nam, said that to enter the German market, Vietnamese companies should study German market trends, take part in German trade fairs to get information on innovative technologies, improve their market brands and develop new marketing and distribution channels. They should also attend business forums and match-making events, Walde added. Conference participants were exposed to information and discussions on German tax regulations, certificates of origin and certificates for exports. Cement consumption bounces back The domestic consumption of cement in the first eight months bounced back to a sustainable status, which is being seen a relief for producers with surplus inventories. Chairman of Viet Nam Cement Association Nguyen Quang Cung told Thoi Bao Ngan Hang (Banking Times) newspaper, "Cement plants are likely to run at full throttle." Chairman of Viet Nam Cement Industry Corporation (Vicem) Luong Quang Khai said that his company's inventory has dramatically fallen. As of August 31, the total inventory was equal to 14 production days. The Vissai Cement Group shared the same opinion, saying the market demand was better than two years ago. "We haven't got detailed statistics, but the production was generally good in the first eight months," Nguyen Vu Thanh, Vissai Cement Group's deputy general director, added. According to the Ministry of Construction, August marked the first consecutive month when cement sales reached five to six million tonnes. Companies in Viet Nam sold 42.53 million tonnes of cement in the first eight months of this year, up 8 per cent year on year, meeting 68.6 per cent of the year's target. Of the total, 32.85 million tonnes of cement were sold at the domestic market, up 7 per cent year on year, while 9.68 million tonnes were exported, an increase of 9 per cent year on year. In August, the country's cement sales rose 2 per cent from the previous month and 3 per cent year on year to 5.29 million tonnes, despite the rainy season. Exports accounted for 1.1 million tonnes of this total, rising 12 per cent month on month. In September, the country's cement sales are expected to increase slightly as many construction projects will restart. The recovery of the real estate market will also contribute to the growth of the cement sector. "Viet Nam has many advantages in cement production and exports, including abundant raw materials, mountains that make up three-fourths of the country's total area and long coastlines with ports systems, which are convenient for exports," Cung said, adding that cement exports will be a good business choice from now till 2025 or even 2030. Many Asian countries have been exporting huge volumes of cement for a good number of years. Among them, Thailand and Japan have been exporting cement for decades. Cung said that the competition in cement exports was not only in market shares but also in pricing. Many of Viet Nam's exports are priced lower than that of other countries, such as rice which is cheaper than that of Thailand. The current cement export prices fluctuate around US$50 to $55 per tonne, and are lower – below 10 per cent – than that of several countries in the region. VN seafood nets buyers in Moscow Vietnamese seafood products have attracted Russian customers at an international seafood exhibition in Moscow because of high demand, especially for tra fish products. Duong Ngoc Minh, deputy chairman of the Viet Nam Association of Seafood Exporters and Producers (VASEP) and general secretary of the Hung Vuong Joint Stock Company, told the Infonet that the three-day exhibition, which ended yesterday, was a good opportunity for Russian importers to seek partners in the seafood products trade following the embargo between Russia on one hand and the United States and European Union on the other. Minh said this was also a great opportunity for Asian seafood exporters like Viet Nam to increase their exports to Russia. "The ban on seafood exports from the US and the Europe has affected the Russian food market, which now needs a huge supply of seafood products from alternative sources. This is a chance for Viet Nam to increase its seafood exports to that market," added Minh. Russia has exploited a large volume of seafood products but does not have seafood processing facilities, so it must import processed seafood products for domestic consumption, he noted. Russian customers have noticed that the prices of tra fish, shrimp and other kinds of seafood at Vietnamese pavilions were lower than the average market prices. Indonesia holds food trade show Food Ingredients Asia (FI Asia), Asia's biggest trade show and meeting of firms manufacturing food ingredients, will be held at Jakarta International Expo Kemayoran, Indonesia, from October 15 to 17. This would be the third food ingredient trade show of leading companies, offering opportunities to expand markets to business players in the food industry around the world. The event will introduce food groups to the world's biggest and developed markets and allow discovery of resources and services as well as new suppliers. It would also provide a window to trends and developments in the food industry in the ASEAN community. Two Vietnamese firms, namely the Ba Dinh Foodstuff Technology Company and the Asia Sai Gon Food Ingredient Company, are attending the event. The enterprises would showcase food ingredients for the food and beverage sector. Viet Nam is participating in the exhibition for the third time. "The exhibition would provide opportunities to companies searching for partners and markets as well as to diversify their food ingredients and beverages," said Ta Quang Ha, director of Ba Dinh Foodstuff Technology Company, at the conference held in Ha Noi last week. Rungphech Rose Chitanuwat, Business Development Director of UBM Asia and Food Ingredients Asia organiser, said the exhibition has been an effective bridge for businesses to advertise their brands and expand their market. The exhibition aims to bring in 450 participants and 13,000 visitors from 56 countries. FI Asia 2015 is scheduled to take place at the Sai Gon Exhibition and Convention Centre in HCM City in May 2015. Workshop spotlights health care A workshop on health consultation for small and medium-sized businesses took place in Ha Noi yesterday. Co-organised by the Ha Noi Small and Medium-Sized Enterprises Association (Hasmea) and VietDoctor Group, the workshop aimed to raise awareness in the business community about the importance of health care. Hasmea will conduct charity healthcare work and consulting on trade promotion activities for entrepreneurs, said Mac Quoc Anh, deputy chair of the association. Marketing strategies discussed in City A conference providing executives and marketing managers tips to enhance the results of their marketing strategies will take place this morning at IDECAF (Institut D'Echanges Culturels Avec La France). Organised by the French Institute of HCM City, CFVG and IDECAF, the conference on "Measuring Marketing Performance" will feature a lecture by Dr Alain Olivier, Professor of Marketing, ESCP Europe/CFVG (The French-Vietnamese Centre for Management Education). KPMG survey optimistic about emerging market expansion, including Vietnam Vietnam was ranked in the top four high growth markets globally for intended investment by US multinational companies in the next 12 months, according to KPMG’s latest survey of US business executives. “It is exciting to see our US clients expressing such confidence in Vietnam,” said KPMG in Vietnam’s chairman and CEO, Warrick Cleine. “Quality investment – in services, manufacturing and infrastructure – is key to Vietnam’s future prosperity, and US investors have a great track record in these areas,” he shared. A recent survey by KPMG LLP, the US audit, tax and advisory firm, reveals that ninety per cent of US business executives involved with business development and corporate strategy have seen revenues from high growth and emerging markets (HGEM) increase in the past year and expect them to continue increasing in the coming months. “High growth and emerging markets have moved to the top of the corporate agenda, and companies are investing beyond the BRIC countries,” said Mark Barnes, national leader of KPMG’s U.S. High Growth Markets practice. “Significantly, there is an increasing appetite for investment in emerging countries such as Vietnam, Chile, Argentina, Malaysia, Indonesia and South Africa. And all for good reason: markets like Vietnam, Nigeria, and India are projected to be the highest growth markets at 6 per cent to 7 per cent in the years and decades ahead,” he noted. Other finding is that an overwhelming majority of executives (84 per cent) say that HGEM countries are important to their company’s strategy and growth – a significant increase of 37 percentage points from last year’s KPMG survey. More companies (29 per cent) expect a higher share of their global revenues ($31 million to $50 million) to come from these countries – an increase of 17 percentage points over prior year survey results. “On average, executives this year expect that nearly one quarter of their global revenues will come from HGEM countries,” said Barnes. “This number has increased from last year and may indicate an opportunity gap throughout the world as emerging countries contribute 50 per cent of the global GDP.” The survey also shows that outside the traditional BRIC countries (including Brazil, Russia, India and China), Chile, Philippines, Argentina, Indonesia and Vietnam have seen increased executive perception over the past year. The number of companies planning to invest at least $5 million in Vietnam in the coming 12 months increased from 7 per cent to 9 per cent. KPMG in Vietnam’s chairman and CEO Warrick Cleine further stated, “The KPMG survey results really confirm what we are seeing on the ground and what I’m hearing from our clients, and that is a restoration of investor confidence again, which is a fantastic sign long-term for HGEM countries, but particularly right here in Vietnam”. The KPMG survey was conducted in the spring of 2014 and reflects the responses of 100 US business executives involved with business development and corporate strategy. Based on revenue in the most recent fiscal year, nine per cent of survey respondents work for companies with annual revenues exceeding $10 billion, 48 per cent with annual revenues in the $1 billion to $10 billion range, and 43 per cent with revenues in the $100 million to $1 billion range. Vietnam suffers support industry shortcomings While many global corporations are trying to look for local suppliers in Vietnam to reduce manufacturing costs, Vietnamese companies are unlikely to be able to join international supply chain. Since Samsung Electronics built a $670 million manufacturing plant in Bac Ninh province in 2007, beginning to turn Vietnam into its biggest manufacturing base in the world, the globe’s biggest mobilephone manufacturers expected to develop nearly 100 local vendors by 2015. After seven years, Samsung Electronics increased its total investment from $670 million to $8 billion with to large-scale manufacturing complexes in Bac Ninh and Thai Nguyen, but only seven Vietnamese companies became vendors of the South Korean corporation. None of them can supply electronic components for Samsung’s smartphones, tablets, camera, TVs or hoovers. Shim Won Hwan, general director of Samsung Electronics Vietnam, said Vietnamese businesses so far had only proved capable of providing packaging and printed boxes. At a seminar and exhibition held last week by Samsung Electronics Vietnam in Hanoi to look for potential vendors, the corporation found no company capable of meeting their requirements. The result reflects the fact that global corporations like Samsung are finding it nearly impossible to source original equipment manufacturers in Vietnam. Last year, Samsung Electronics Vietnam spent nearly $20 billion on importing electronic equipments and spare parts from overseas vendors. “If we can’t develop support industries, we can’t avoid reliance on overseas supply. This is a competitive weakness and means it is harder to develop a sustainable economy,” said Hwan. About 100 local companies attended an event last week, expecting to join the global supply chain of the world’s biggest mobile phone manufacturers. But most of them admitted they could not currently meet Samsung’s requirements at this time. “Samsung’s requirements are a major challenge. They include many criteria, including protecting the environment, R&D activities, delivery and working conditions that most Vietnamese companies can’t satisfy,” said Tran Anh Vuong, director of the Bac Viet Company, which already supplies products to Samsung Electronics Vietnam through an original vendor. He added Samsung was not unique, as other global corporations also required similar criteria. “If Vietnamese companies want to join global supply chains, they must improve their production ability and become more innovative and competitive,” said Vuong. Steel firms in meltdown Domestic steel firms are struggling as the market suffers from acute oversupply, while tariffs are set to fall on imported steel from Russia in the near future. The Vietnam Steel Association (VSA) recently filed a list of steel firms who have struggled to survive including 11 construction steel manufacturing and 10 steel ingot rolling firms. Also according to VSA figures, Vietnam is able to turn out more than 11 million tonnes of construction steel, 9.29 million tonnes of steel billets, over 2.1 million tonnes of steel pipes, 3.28 million tonnes of galvanized steel and over four million tonnes of cold rolled steel per year. Yet domestic steel consumption equaled just 11 million tonnes last year. In addition to the acute oversupply affecting the domestic market, giants Formosa and Hoa Phat Group are about to commission major new steel plants. VSA’s former chairman Pham Chi Cuong noted the underlying weakness of the domestic market, claiming that steel firms had rushed into doing business based purely on a herd mentality. “Short-term and spontaneous investments in conjunction with the use of backward technology have put lots of local steel firms on the verge of going bust,” Cuong noted. Many localities have also exacerbated the situation by approving investment certificate in unnecessary projects. According to a Ministry of Industry and Trade report in January 2009 reviewing the implementation of the Vietnam steel industry for the 2007-2015 period, 32 projects had been approved by localities that had no place in the national sectoral plan. As far back as late 2009, VSA figures already showed that construction steel production capacity of existing factories and those about to enter operation had reached seven million tonnes per year, yet local consumption was only around four million tonnes per year. In this context, VSA has proposed moratorium on casual construction steel plants. If unplanned local over-production wasn’t already a problem, falling per cent tariff rates for imported steel from Russia will also be another factor as Vietnam and the Customs Union of Russia, Belarus and Kazakhstan are expected to sign a free trade agreement this year. Russia ranked fifth in 2013 in raw steel production with 68.7 million tonnes and exported 23.6 million tonnes while Vietnam was at 26th position with 5.6million tonnes being produced. In another development, in early September the Ministry of Industry and Trade imposed tariffs ranging from 10.71 per cent to 37.29 per cent on stainless steel products imported from mainland China, Taiwan, Indonesia and Malaysia in a move to protect the domestic market. Other two security companies merged The State Security Commission of Vietnam on September 16 licensed establishment of Vietnam International Security Company, which is merged from Vietnam International Securities and Dai Tay Duong Securities Joint Stock Company. The new company has its chartered capital of VND60 billion (US$2.83 million). According to the commission chairman Vu Bang, the merge marks an important event in the stock market and security companies’ restructuring. The restructuring has reduced the number of stock companies by 20 percent. A total of 105 company had been licensed, he added. At the end of 2013, the commission approved a merger of Military Bank Securities Company (MBS) and VIT Securities Company (VITSE), creating a new company with chartered capital of over VND621 billion (US$29.32 million). China-ASEAN Expo promotes growth in regional trade links The eleventh China-ASEAN Expo (CAEXPO) in Nanning, China, is the fruit of a strategic partnership between the ASEAN nations and China. Deputy Vietnamese Prime Minister and Foreign Minister Pham Binh Minh said this yesterday at the opening of the expo in China's Nanning City. China's Deputy Premier, Zhang Gaoli, Singapore Prime Minister Lee Hsien Loong , and Cambodian Prime Minister Hun Sen, were among the guests. Viet Nam's Foreign Minister said the expo was organised under the regional comprehensive economic partnership (RCEP) between ASEAN, China and other partners, which was still being finalised. He said it would facilitate freer flows of goods, services, investments and human resources as well, create value chains and contribute to maintaining peace and stability for economic development in the region. Minh called for closer co-ordination between the bloc and China to maintain peace, stability and navigation safety in the East Sea as well as implementing fully and seriously the Declaration on the Conduct of Parties in the East Sea (DOC). He said it would also speed up the creation of a Code of Conduct in the East Sea (COC), in line with international law, including the 1982 UN Convention on the Law of the Sea. Themed a Jointly-built Maritime Silk Road for the 21st Century, the annual expo has drawn 2,330 businesses showcasing their products and services at 4,600 booths. This year, Viet Nam's pavilion boasts 200 booths of products displayed by 100 businesses, the largest number among the bloc's members. The expo is jointly held by China's Ministry of Trade and the 10 ASEAN member countries. It is one of the top 10 Chinese exhibitions and an important mechanism to promote friendship and trade links between ASEAN member states and China. Food, packaging expo attracts over 300 firms Some 305 firms showcased their products and services at nearly 380 booths at an international exhibition on food-beverage and processing-packaging, or Vietfood & Beverage and Propack 2014, in HCMC, which ended last Saturday. The exhibition at Tan Binh Exhibition and Convention Center was viewed as a chance to bring together businesses from the UK, Egypt, Poland, Portugal, Belgium, Bulgaria, Denmark, Germany, Italy, Canada, Taiwan, Korea, Indonesia, Malaysia, Japan, Thailand, Singapore and Vietnam. The exhibition organized by Vietnam National Trade Fair and Advertising Company (Vinexad) featured foodstuffs and beverages, as well as processing-packaging machines and equipment.   The Vietnamese major players in the food sector included Vissan, Dan On Food Company Ltd., Asuzac, Hoa Lua Rice and Phuoc An. Meanwhile, beverage brands are Sabeco, Tan Hiep Phat Group, Halico, Bidrico and Chuong Duong. The XL Energy from Poland, Thai Spirit from Thailand, Rudolf Keller from Italy and other foreign beverage companies were displaying their products at the event. Enterprises from Italy, Belgium, Malaysia and China showed technologies and equipment used to process and pack foodstuff and drinks. Companies from South Korea, Taiwan and Thailand introduced their processed foods and nutritional beverages. There were foreign producers of processed foods such as European Traders from Bulgaria, Orana from Denmark, PT.Mulia Boga from Indonesia, Vita Naturals from Canada and so on. The Ministry of Industry and Trade forecast Vietnam’s food sales in 2011-2016 to grow by 5.1% per year to some US$29.5 billion. Per capita consumption will rise by 4.3%, equivalent to VND5.8 million per year by next year. In the same period, alcoholic beverage sales are projected to grow by 7.5% while non-alcoholic beverages are estimated at 8.2%. Opportunities for cooperation with Malaysia abound Vietnamese businesses have a lot of opportunities to meet and build business links with 26 Malaysian companies at MBC Merdeka trade fair slated for September 13-15 in HCMC. The Malaysian businesses participating in the fair are active in 14 sectors like healthcare, garments, jewelry, interior décor, automotive parts, and logistics. Malaysia is strong in these sectors, so Malaysian firms want to expand to the Vietnamese market. Therefore, this is a chance for companies in Vietnam to look for Malaysian business partners, and also prepare for opportunities that will be brought by the ASEAN Economic Community that will debut in 2015. Mr. Tom Chan, a representative of Best Nine Enterprise, which makes equipment for bakeries and fast food restaurants, said fast food restaurant chains are growing rapidly in HCMC and Vietnam as a whole, and this is why Best Nine Enterprise is present at the fair to search for local partners. Many companies said that through the event they expect to find business partners to set up representative offices in the country. A number of enterprises in sectors such as health, cosmetics and lingerie have expressed interest in looking for distributors. The fair also creates opportunities for local firms to gain access to new business partners from Malaysia. Foreigners keen to join bad debt settlement Around 500 institutional and individual investors, many of them foreign, said at a seminar in HCMC on September 11 that they are exploring opportunities to get involved in the bad debt settlement process in Vietnam. Speaking at “The Gateway to Vietnam: Looking for new investment opportunities” organized by Saigon Securities Inc. (SSI), SSI Fund Management deputy general director Nguyen Khac Hai said there have been a lot of opportunities on the local debt market. Many foreign institutions have expressed keen interest in cooperating with Vietnamese partners to take part in the market. But no deals have been made so far due to mechanism-related problems, Hai said. “Opportunities are still out there and investors are expecting specific and practical solutions from the Government,” Hai noted. Currently, only Vietnam Asset Management Company (VAMC) of the central bank, Debt and Asset Trading Company of the Finance Ministry and asset management firms of banks are allowed to trade debt. However, VAMC is facing numerous challenges as it cannot trade debt based on market prices. Can Van Luc, deputy general director of Bank for Investment and Development of Vietnam (BIDV), said opportunities are out there for foreign investors in the fields of mergers & acquisitions (M&A), asset trading including debt, and consultancy for organizations. Darryl James Dong from International Finance Corporation (IFC) said it is hard to know whether bad debt is a good investment opportunity for investors or not as the situation in Vietnam is different from other nations where he used to work. As China has too much money, it solves bad debt in a different way, while other countries accept bank losses, he said. Tran Du Lich, a National Assembly deputy, said most bad debt is related to the real estate market while many projects in the sector are unfinished. “VAMC with total capital of a modest VND500 billion has not been able to help improve the situation. Though the firm has bought VND56 trillion worth of debt on book value but the situation is still far from solved as effective mechanisms for liquidating those assets used as mortgages for loans are absent,” Lich said. However, Lich noted the Government is trying to spurring the real estate market and facilitate the trading of unfinished property projects. The National Assembly also discussed foreign home ownership on Wednesday. Total debt is now around VND160 trillion. The hardest task is that the pace of debt settlement must be quicker than that of new debt rise. When the situation is still gloomy, preventing debt from turning sour is more important than trading debt, Lich added. Luc of BIDV said the Government should give more power and a capital and mortgaged asset handling mechanism to VAMC. Besides, it is necessary to speed up the evaluation of debt-related assets. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR