BUSINESS IN BRIEF 5/9 Amata to pour US$530 mil into Vietnam Amata Vietnam JSC, a subsidiary of the Thai group Amata, will earmark US$530 million for a hi-tech park and urban area complex in the southern province of Dong Nai. Amata Vietnam JSC General Director Huynh Ngoc Phien said the company has just signed a cooperative agreement on construction of the complex with the provincial People’s Committee. Amata Express City, expected to become Asia’s financial centre in the near future, will sit on an area of 1,285 hectares. Amata Vietnam will contribute 80.5% of total investment capital while the remainder will be sourced from the Dong Nai Industrial Park Development Corporation (Sonadezi). The project, to be located near future Long Thanh airport, is scheduled to get off the ground in 2016 and will be completed over 10 years. According to regional investors, there is a strong trend of financial centres shifting from Hong Kong to Bangkok or Singapore. If Vietnam keeps up with the trend, the complex will become Asia’s financial centre in the future. HNT Vina inaugurates phone factory in Hoa Binh HNT Vina Company Limited held a ceremony on September 3 at Luong Son Industrial Zone, Hoa Binh province to inaugurate its information technology (IT) factory. The ceremony was attended by Chairman of Hoa Binh provincial People’s Committee, Nguyen Van Quang and Republic of Korea (RoK) Ambassador Lee Hee Jun, as well as 250 delegates. Considered as the most modern mobile phone manufacturing plant in Vietnam, the plant is part of an agreement between Hoa Binh province and the RoK’s HNT Electronics Company. It has contracted to operate for 43 years, and includes offices, factories, sewage treatment facilities as well as other necessary constructions. The factory is expected to create jobs for approximately 600 local workers and produce 120 million units per year which will contributes around VND11 billion annually to the province’s budget. On the occasion, HNT Vina Company Limited raised a fund to support outstanding students in Hoa Binh city. Ministry of Finance clamps down on beer consumption The Ministry of Finance has proposed a new draft decree which would tighten control over beer sales in Vietnam. According to a report issued by the ministry, the sales of alcoholic beverages in Vietnam has had negative social impacts, including increased domestic violence, traffic accidents and smuggling. However, it has also brought about an expanding industry, and with it, jobs and increased tax revenue. The ministry proposed a draft decree on the production and sales of beer so as to prevent harmful effects. The draft would ban the sales of beer in vending machines or online. Sellers would also banned from operating near schools, hospitals and state offices. Even selling beer in small stalls on the road could be considered a violation. The decree forbids the sales of beer for those who appear to be drunk, pregnant women and those with a known history of alcohol abuse. According to the Ministry of Finance, the state budget would be able to take in an extra VND3.1 trillion if the decree were to be implemented. Moreover, the ministry stated that the state should invest in awareness campaigns concerning the decree, increase the number of market managers to clamp down on low-quality and smuggled products. They went on to say that the decree would help prevent social disorder and protect the interests of genuine beer producers. Stock market yet to function as major fund raising channel In spite of bustling activity over the past time, the local stock market has not played its main role as a major capital raising channel for listed enterprises. According to a Financial Sector Assessment (FSA) report of the International Monetary Fund (IMF) and the World Bank, there have been around 700 listed enterprises on the two local bourses and many of them were formerly State-owned businesses. The State still holds a majority stake in a-third of the enterprises. Despite the large number of listed firms, the report said market capitalization remains low and many large State-run companies have yet to get listed on the market. Therefore, the capital market is still at a start. It has a strong need for institutional investors and professional brokers to attract more players and large enterprises. In fact, just a few enterprises have listed on the market to mobilize capital due to difficulties in share and bond issue. The corporate bond market is almost an exclusive playground for large enterprises as investors do not want to hold bonds issued by small firms with poor or unclear financial situations. Due to challenges in issue and information proclamation, the market has attracted fewer newcomers over the past two years, and this did not seem to reflect what the bourses gained in the first months of this year. In the first six months of this year, the VN-Index gained 14.6% while the HNX-Index jumped 14.9%. According to some securities firms, both indexes are expected to advance further in the second half due to supporting factors such as macro policies, Trans-Pacific Partnership (TPP) prospect and initial public offering (IPO) schemes by large enterprises. Meanwhile, the report said the local bond market has remained modest in terms of scale with a focus on government bonds. The total bond value is now around 15% of the nation’s gross domestic product (GDP), in which G-bond makes up around 90%. A recent report of Vietcombank Securities Company showed that the Government mobilized VND151.7 trillion worth of bonds in the first six months of this year, including nearly VND9 trillion worth of corporate bonds. Some enterprises issued bonds to reschedule bank debt and this meant they raised no new funds from the issues. However, the report appreciated the Government’s effort in developing the bond market that could help enterprises and local authorities approach long-term capital sources. The effort also helps secure stability of the financial system. The WB and IMP conducted the FSA Program (FSAP) in 2012 and finished it June. The program evaluates various aspects of the financial sector including stability and development potential. Bao Viet mulls VND1-billion compensation for coach accident Bao Viet Group plans VND1 billion in compensation for victims of the coach accident that killed at least a dozen and injured 41 others in Lao Cai Province on Monday evening. The group said in a statement on September 2 that the coach operator had bought civil liability insurance with Bao Viet Hanoi Company with the maximum compensation of VND70 million each person. Therefore, the enterprise is expected to pay some VND1 billion to the victims. After gathering all information about the accident, Bao Viet Lao Cai Company, a member unit of Bao Viet insurance system, sent staff to the scene and visit the victims and advance insurance compensation for them. The enterprise will also coordinate with related forces to help the passengers get compensation payouts quickly. According to the National Steering Committee for Traffic Safety, the bus carrying 53 passengers plunged into an abyss after its driver tried to avoid a car running in the opposite direction. The accident took place at around 7:30 p.m. on Monday when the coach, owned by Sao Viet Company, ferried the passengers from the renowned resort town of Sa Pa back to Lao Cai Town in the northern province. Vietnam-China trade surges in Jan-Aug Despite tensions in the East Sea and relevant issues in mid-May, two-way trade between Vietnam and China still surged in the January-August period, according to preliminary estimates of the Ministry of Industry and Trade. The ministry’s report showed Vietnam’s exports to China went up nearly 16% to reach US$9.79 billion in the eight-month period. In the rest of the year, the country’s export to this market is expected to generate US$5-5.2 billion, or US$1.25-1.3 billion per month. If so, Vietnam’s exports to China for the whole year can hit the target of US$15 billion. Products with high export values in the period included computers and electronic components with US$1.26 billion, crude oil US$960 million and rice nearly US$722 million. China remains Vietnam’s biggest rice buyer, accounting for 32% of Vietnam’s total rice export. Agro-fishery-forestry products took up 30-31% of Vietnam’s total exports to the Chinese market, minerals 20-21%, materials 32.5%, and processed and manufactured goods accounting for the rest. Despite the staggering increase in exports to China, imports from this neighboring market remained strong, causing Vietnam’s trade deficit with China to widen. As of last month, Vietnam had imported over US$27 billion worth of products from China, rising by nearly 15.8% against the same period a year earlier and almost tripling the export turnover. Vietnam continued to suffer a trade deficit of up to US$17.26 billion with China, averaging out at US$2.16 billion a month. Towards the year-end, the monthly import turnover is forecast to reach US$3.23 billion, pushing the year’s total import value to US$40 billion. China has been the biggest supplier of Vietnam in recent years with significant increases in import turnover noticed since 2010. Between 2010 and 2013, Vietnam’s imports from China made up 25-28% of its total imports. Regarding major products imported from China, materials account for 60%, machines and equipment 20%, and consumer goods the remainder. In the past three years, Vietnam’s exports to China picked up by around US$800 million per year on average while imports rose by US$3-3.5 billion a year. Ministry drafts many incentives for supporting industries The Ministry of Industry and Trade has listed a host of incentives related to corporate and personal income taxes and import tariffs for individuals and organizations in a draft decree on developing supporting industries. The ministry suggested a pilot scheme applicable until 2020 for the draft decree to halve personal income tax for a maximum period of one year for individuals working as specialists or trainers in technology transfer in supporting industries. The ministry also proposed a corporate income tax break for a maximum of four years and a 50% tax reduction in the nine following years for organizations from the first profitable year. If enterprises do not have taxable incomes in the first three years of operations, they will enjoy tax exemptions and reductions from the fourth year. The incentives also include tariff exemptions on goods imported to create fixed assets for production and products of supporting industries. Enterprises will also get financial support if they invest in technologies in pollution treatment and environmental protection. The draft decree also contains incentives for investment credit, land rent and taxes for small and medium enterprises (SMEs) operating in the sector. The lending rate for SMEs in supporting industries will be preferential and will not exceed 80% of normal rates for loans with maturity periods of up to 10 years. These loans may be guaranteed by a supportive credit fund for SMEs. In addition, the SMEs would have their projects subject to a tax payment extension for six months from the first deadline as stipulated in the Law on Value Added Tax. For hi-tech supporting projects, the ministry proposed a preferential corporate income tax of 10% for 15 years, tax exemptions for a maximum of four years and 50% tax reductions in the nine following years. If projects in the supporting industries are located outside industrial zones, land rent would be reduced by 50% for 11 years. Existing projects will also benefit from this incentive if they are renovated with production capability improvement by at least 20%, according to the draft decree. The draft decree also envisages a corporate income tax of 10% for 15 years, tax exemptions for a maximum of four years and 50% tax reductions in the nine following years for high-tech projects in the supporting industries. Despite strong commitments of the Government and local authorities to developing supporting industries, some enterprises bemoaned that they have yet to receive any significant assistance from their policies so far. Decision No.12/2011/QD-TTg dated February 22, 2011 is considered the Government’s first statement to encourage development of supporting industries. In fact, many enterprises have claimed a series of difficulties in production expansion due to higher lending rates than other countries. August sees more business suspensions than start-ups The number of newly-established businesses continued to drop in August while firms going bust and suspending operations kept rising, indicating local businesses were still mired in hardship and an economic recovery is still slow. Last month, there were around 5,000 new enterprises with total registered capital of over VND27 trillion, down 0.6% and 13.2% respectively from the previous month. According to the General Statistics Office, the average registered capital of a new business startup reached VND5.4 billion in August, declining 13% over July. The new businesses were estimated to generate 79,400 new jobs, down 9.8% against the previous month. Meanwhile, the nation recorded 6,680 business closures last month, surging 35.5% from July. Around 755 of those firms were dissolved, around 1,000 others suspended operations and the remainder indefinitely stopped operations to wait for business code closures or did not register. Between January and August, there were 47,500 newly-established enterprises with combined registered capital of nearly VND290 trillion, falling 9.5% in business number but rising 14.2% in registered capital against the same period last year. Around 44,500 businesses went bust and suspended operations, up 12.9% year-in-year. Some 6,400 of them were dissolved, 7,600 halted operation and 30,500 others stopped operations to wait for business code closure or did not register. The ailing enterprises had total registered capital of over VND339 trillion, including VND49.3 trillion belonging to the firms that had completed dissolution procedures and nearly VND290 trillion from those calling off operations to wait for business code closures. In the first eight months of this year, the total newly pledged capital reached over VND658 trillion, including nearly VND290 trillion from newly-established firms and nearly VND369 trillion from operational entities. There were 10,900 enterprises resuming operation in the period after earlier interruptions, up 2.6% year-on-year. In August alone, nearly 1,500 firms resumed operations, surging 35.2% month-on-month. Some sectors reported increases in newly-established firms and declines in enterprises facing difficulties. The electricity, water and gas group saw the number of new start-ups rise 12.4% while insolvent and closed enterprises down 27.9%. The figures of firms in other services groups were up 3.6% and down 15.9% respectively. The art and entertainment sector registered rises of 46.5% in new start-ups and 26.2% in closures, agro-forestry-aquaculture up 23.9% and 6.3%, real estate trading up 21.5% and 11.2%, healthcare and social supportive activities up 18.8% and 30.9%, information and telecommunication up 7.9% and 30.9%. On the other hand, wholesale, retail and vehicle repair reported an 18.4% drop in new start-ups and a 15.8% rise in closures; travel, equipment and appliance lease and other services down 13.7% and up 5.4%, construction down 12.1% and up 12.9%. Int’l organizations to support agriculture restructuring Some international organizations have pledged to stand behind Vietnam in restructuring its agricultural sector after learning about a project of improving husbandry, cultivation and seafood sectors. The Ministry of Agriculture and Rural Development presented the project at a conference in Hanoi City last week. Agriculture minister Cao Duc Phat called for international donors to assist in realizing the project in order to build three core sustainable pillars of economic, environmental and social development for the local agriculture industry and the nation as a whole. As the project focuses on market demand and consumers’ needs, the Government will change its role from a direct supplier to a creator of a healthy business environment to support enterprises of all economic sectors to increase investments in and quality of their services. Nguyen The Dung, a representative from the World Bank (WB) in Vietnam, said the international institution is funding a “Sustainable agriculture transformation in Vietnam” (VnSAT) project. In the future, the WB proposes the focus of VnSAT be on rice production in the Mekong Delta and coffee in the Central Highlands region. Canadian Ambassador to Vietnam David Devine said investment incentives in agriculture will attract more Canadian investors to Vietnam, especially in hi-tech and environment services. Canada pledged to continue assistance for Vietnam by building programs suitable to Vietnam’s needs and attending to the sectors that Canada can help in terms of trade and development, Devine said. Lan Huong, a representative from the UN Food and Agriculture Organization (FAO) in Vietnam, said FAO will help increase incomes of farmers as a key factor for development. FAO has plans to aid in institutional reform, climate change adaptation, improvement of regulations on goods and services, building effective agricultural and food systems, and science and technology development. Thailand now Vietnam’s largest veggies supplier Thailand has overtaken China as the largest fruits and vegetables supplier of Vietnam, the Vietnam Fruits and Vegetables Association (Vinafruit) reports. Nguyen Van Ky, general secretary of Vinafruit, said fruits and vegetables imports from Thailand reached nearly US$73.5 million in the first six months of this year compared to US$57.5 million from China. Previously, China had always been the largest supplier of these products to Vietnam. Statistics from the General Department of Customs showed that in the January-July period, Vietnam spent US$106 million on fruits and vegetables imports from Thailand, much higher than US$71.4 million worth from China. Meanwhile, Vietnam’s revenues of fruits and vegetables exported to China and Thailand were nearly US$259 million and US$20 million respectively. Explaining the surprising change in the trade balance of vegetables and fruits, Ky said local importers have sought alternative markets to ensure the supply of these products, especially from Thailand and Myanmar, due to worries among local consumers about insecticide residues found in vegetables and fruits imported from China. Particularly, Myanmar’s vegetables and fruits sold to Vietnam reached over US$36.5 million in the January-June period while the figure was only US$4 million in the same period last year. Vinafruit predicted that vegetables and fruits from Thailand will increasingly appear on the shelves of stores via Metro Cash & Carry Vietnam, a big store chain acquired by Thai firm Berli Jucker (BJC) in early August. Steel, cement sales forecast to grow higher next year Industry insiders have grounds to project higher sales of steel and cement next year when demands for these building materials have rebounded and increased steadily in the year to date. According to the Building Materials Department under the Ministry of Construction, 5.3 million tons of cement was consumed last month and domestic consumption alone accounted for nearly 4.2 million tons of the total, up 9% year-on-year. The department put total cement consumption in the first eight months of this year at 42.5 million tons with domestic sales up 7% year-on-year to about 33 million tons. Despite the absence of specific sales figures, Do Duy Thai, vice chairman of the Vietnam Steel Association (VSA), said consumption of construction steel has bounced back, especially last month when sales rose 8% compared to the same period last year. The national consumption of construction steel reached five million tons last year, down 500,000 tons against the previous year. This together with supply outperforming demand resulted in tougher competition between steel mills. However, things have changed and Thai predicted steel sales would jump 10% this year over last year. He expected a stable recovery of the economy would fuel strong increases in consumption of steel and other building materials next year. The Vietnam Association for Building Materials is also upbeat about cement demand in the coming time. Chairman Tran Van Huynh estimated domestic sales of cement this year would rebound to the level of 2010 when 50 million tons was sold, excluding 14-15 million tons for export. Factories that export cement and clinker have been able to run at 80% capacity, an improvement from 70%. Therefore, Huynh said the association is pinning high hopes that the national consumption of cement will be higher next year. Experts in building materials said stable selling prices, rising demand and falling inventories are positive signs for steel and cement producers to perform better towards the end of this year and next year. Disease-free breeding areas to be set up The Ministry of Agriculture and Rural Development has approved a pilot project on establishing disease-free breeding areas for livestock and poultry in 2014-2018 to provide local customers with safe food. Based on the project, such areas will be established in seven provinces having bigger livestock herds and poultry flocks in the country – Nam Dinh, Thai Binh, Dong Nai, Ba Ria-Vung Tau, Binh Phuoc, Binh Duong and Tay Ninh. The target is to free breeders from the fear that their chicken may be infected with bird flu or that their pigs will contract blue-ear or foot-and-mouth diseases.   Supply of eggs and meat to the domestic market, especially to HCMC and Hanoi city, mainly comes from those provinces. At present, Dong Nai Province has the largest numbers of pigs and fowls with some 1.4 million and 12.5 million respectively, followed by Thai Binh Province with over one million and 11 million. Other provinces have 400,000-500,000 pigs and 4-5 million fowls each. As per current regulations, if epidemic diseases on livestock or poultry appear in a province, all its animals must be examined before being allowed for consumption, or could be banned in the domestic market at the height of an outbreak. However, when the project is conducted in the seven provinces, their pigs and chickens are free from the test in the same situation. The project will be conducted from now until 2018 and cost around VND73.5 billion each year. According to the Department for Animal Health, at present, foot-and-mouth and blue-ear diseases on pigs or poultry are not detected in any provinces nationwide, but the A/H5N6 strain of bird flu is detected in three northern provinces of Lang Son, Ha Tinh and Lao Cai. Wind energy project gets the green light Prime Minister Nguyen Tan Dung has given his stamp of approval for an unprecedented renewable energy project utilising wind power, with funds mainly provided by the German Government. The four-year project set to be carried out from 2014 to 2018 has an estimated cost of EUR3.7 million. Of the total, EUR3.6 million is sourced from the German Government’s official development assistance (ODA), and the remainder comes from the Vietnamese State budget. It aims to explore the potential of wind energy in Vietnam by creating an interactive database to assess the impact of wind energy development and zoning plans for wind power generation. The project is expected to utilise cutting-edge wind energy technology, and increase the national capacity of Vietnam in wind energy development and management. PM Dung asked the Ministry of Industry and Trade (MoIT) to arrange Vietnam’s counterpart capital and ensure the implementation schedule of the project in accordance with current regulations. Seafood imports hit US$720 mln Vietnam’s total seafood import value has reached US$720 million over the past eight months, up 73% compared to the same period in 2013. Most products were shipped from India and Taiwan (China), according to the Ministry of Agriculture and Rural Development. As of July 2014, Vietnam had signed Indian shrimp import contracts worth more than US$200 million. However, the country’s seafood exports to India fetched less than US$8.5 million. Vietnam mainly imports tiger shrimp from India to tackle shortages in materials exacerbated by diseases. Report predicts decline in finance, banking and insurance employment The Third Vietnam Labour Market Update, a quarterly bulletin released on September 3, forecast a rise in the demand for skilled workers in the fields of mechanical production, food processing, electricity generation and distribution, communications, health services and social work in the last quarter of 2014. The bulletin also foresaw fewer jobs being available in the finance, banking and insurance sectors in the months to come. It noted that the labour quality standards dictated by Vietnam ’s process of economic restructuring were still posing a challenge for the country’s workforce. However, the structure of the labour force had been transformed in a positive way, with the number of jobs in the aquaculture and agriculture sector decreasing, whilst Vietnam’s employment rate in general was on the rise. According to the bulletin, in the second quarter of 2014, 5.8 million people were newly employed - 321,000 people or 0.59% more than in the first quarter. Vietnam’s low unemployment rate was the labour market’s key feature, the bulletin said. It reached its lowest point in the last twelve months at 1.84%. Employment shortages had been reduced, and supply and demand were better connected, the bulletin said. The bulletin also pointed out that there was currently a high demand for skilled trades- and craftsmen, with 22 million people currently working in this sector without proper qualifications. In stark contrast, approximately 75,000 university graduates were taking jobs requiring qualifications lower than their degrees. The bulletin reported that the female employment rate was on the rise, with more women finding jobs during this period. Published by the Ministry of Labour, Invalids and Social Affairs (MoLISA) and the General Statistics Office (GSO), with support from the International Labour Organisation, the bulletin analyses trends in the labour market in order to improve labour policy-making. HSBC: Vietnam’s PMI drops for four straight months The Purchasing Managers’ Index (PMI) of Vietnam posted 50.3 in August, down from 51.7 in July and falling for the fourth consecutive month to signal the weakest improvement in business conditions since November 2013, said HSBC Vietnam and Markit Economics Limited. HSBC’s press release issued on September 3 said the growth rate in manufacturing output eased again in August and was the slowest in the current 11-month sequence of expansion. Behind the weaker rise in output was a fall in new orders, the first in nine months, but the reduction was only marginal. Lower new business also impacted on stocks of finished goods, which increased at the strongest pace in 13 months. Some panellists attributed the accumulation of inventories to delays in deliveries of products to clients which were partly due to the enforcement of truck weight restrictions in August. A further sharp rise in input costs was recorded during the month amid increased costs of transportation linked to the tonnage rules and higher fuel costs. The passing on of higher cost burdens to clients lead to a third successive monthly increase in output prices at Vietnamese manufacturing firms. “The slowdown of activity is expected as new orders are dragged down by weak external and internal conditions. A build-up of inventories and weakening of new orders suggest that output will remain subdued in the months ahead,” Asia Economist at HSBC Trinh Nguyen was quoted by the press release as saying. “We expect output to rebound in the fourth quarter on better demand”, she added. Vietnam climbs two notches in global competitiveness index The World Economic Forum (WEF) released its Global competitiveness Report 2014-2015 on September 3 citing Vietnam as having improved by two notches, to 68thfrom last year’s 70th, in its global competitiveness ranking. According to the WEF report, Vietnam ranks sixth in the South East Asian region, trailing after Singapore, Malaysia, Thailand, Indonesia and the Philippines. This year, Switzerland continues as the world’s most competitive economy, followed by Singapore, the US, Netherlands and Germany. Newly-emerging nations including Saudi Arabia, Turkey, South Africa, Brazil and India are down in their rankings this year while China has moved up one notch to 28th position. The annual Global Competitiveness Report measures the competitiveness landscape of 144 economies based on over 100 factors grouped into 12 pillars, providing insight into the drivers of their productivity and prosperity. Retailers needed to push VAT refund General Taxation Administration under the Ministry of Finance has said it was necessary to increase the network of retailers registering to join the value-added tax (VAT) refund programme to make it more appealing to international tourists. The administration's programme, which allows foreigners to claim VAT refunds for goods purchased in Viet Nam, took effect in July. Tourists could get a 15 per cent refund on goods for bills worth more than VND2 million (US$94) and bought within 30 days of their exit date. The programme had previously been on trial at HCM City's Tan Son Nhat International Airport and Ha Noi-based Noi Bai International Airport. However, the programme only demonstrated a fraction of its potential due to the modest number of retailers who joined the programme. Figures from the administration showed that after two years since the pilot programme launched, only 69 retailers had registered with 270 shops at shopping malls of Ha Noi, HCM City and Binh Duong Province. Le Thi Duyen Hai, deputy head of the administration's unit of tax enumeration and balancing said that the modest number of shops created difficulties for foreigners who wanted to claim the refund. Many shops had also failed to show signage claiming to offer the tax refund, meaning many international tourists did not take advantage of the scheme. Hai said the administration had inspected the filling out of tax refund declarations at shops and had to remind them about the tax-refund signs. The Circular 72/2014/TT-BTC stipulated retailers would be fined depending on their violations and required to stop selling tax-refund items to foreigners. So far, none of the retailers have been fined or been forced to stop trading, Hai said. She suggested that it was necessary to enlarge the network of shops at other localities where tours were organised to boost the consumption of made-in-Viet Nam items, such as handicrafts. Currently, goods that were given tax refund were imported handbags, watches, sunglasses, cell phones and clothing items, she added. Hai said the administration would work with local authorities to make a list of potential enterprises and encourage them to join the programme. The administration would also enhance the dissemination of information on the programme. Electronics exports top $1b More than 154 electronic businesses in this southern province have exported more than US$1 billion worth of products in the first eight months of 2014. Figures from the provincial Department of Planning and Investment showed that phones and spare parts fetched $700 million, or 40 per cent more than that of the same period last year, while computers and other electronic products earned $400 million, or four-per cent more than that of the same period last year. According to the department, the province has so far licensed 154 foreign-invested projects in the electronics industry that are employing nearly 50,000 people. Japan has been investing in most of the projects. The Viet Nam-Singapore Industrial Parks I and II are home to the largest number of electronics businesses at 126. At present, Binh Duong is calling for investment in high-technology areas such as electricity and electronics, food processing, pharmaceuticals and support industries. Manufacturing sees drop in new orders HSBC's Purchasing Managers' Index for August suggests another slight loss of momentum in the Vietnamese manufacturing sector as output growth slowed and new orders fell slightly. Released yesterday, the PMI – a snapshot of operating conditions in the manufacturing sector obtained through a poll of purchase executives in around 400 manufacturing companies with a value of above 50 showing an overall increase and below 50, an overall fall – posted 50.3 last month, down from 51.7 in July. It fell for the fourth consecutive month to signal the weakest improvement in business conditions since last November. Behind the weaker rise in output was the fall in new orders. Declining client demand was mentioned by those respondents that posted a fall in new work. New export business also decreased, ending a five-month sequence of expansion. Falling new orders led backlogs of work to decrease for the fourth straight month, albeit only modestly. Lower new business also impacted stocks of finished goods, which increased at the strongest rate in 13 months, though some panellists also attributed the accumulation of inventories to delays in delivering products to clients. Larger vendor lead times were again a feature of the sector in August as the enforcement of truck weight restrictions continued to delay deliveries. Lead times lengthened for the sixth month in a row, and at a broadly similar pace to that seen in July. A further sharp rise in input costs was recorded during the month amid increased costs of transportation linked to the tonnage rules and higher fuel costs. But the latest rise in input prices was the slowest since April. The passing on of higher cost burdens to clients led to a third successive monthly increase in output prices at manufacturing firms, though the inflation rate was only slight. Staffing levels in the sector remained unchanged on average during August. Some panellists reported having taken on extra staff to help support a rise in production. Although purchasing activity continued to rise, the rate of expansion was only fractional and the weaker in the current year-long period of growth. Several panellists reported having lowered their purchasing in response to the falling client demand. A slower rise in input buying meant that pre-production inventories decreased marginally. Commenting on the PMI survey, Trinh Nguyen, Asia economist at HSBC, said :"The slowdown in activity is expected as new orders are dragged down by weak external and internal conditions. Trade deal seeks to boost VN-Russia ties The free trade agreement between Viet Nam and the Customs Union of Russia, Belarus and Kazakhstan would boost trade ties especially with Russia, a seminar heard in HCM City last Friday. Negotiations for the FTA are on and expected to conclude by the end of this year, according to Tran Ngoc Quan, deputy director of the Ministry of Industry and Trade's European Market Department. When it is in place, at least 80 per cent of Vietnamese goods exported to that market, especially consumer goods, will enjoy tax exemption. With a population of 140 million, Russia is a potentially lucrative market for Vietnamese products, and the two sides also enjoy close relations. Viet Nam's trade with that country has risen considerably in recent years to nearly US$2.75 billion last year, but remained well below potential, accounting for a mere 1 per cent and 0.25 per cent respectively of Viet Nam's and Russia's total trade. Besides, Russian businesses have invested more than $2 billion in Viet Nam while in the reverse direction, the amount is nearly $2.4 billion. With the complementary features of the two economies coupled with efforts made by them, trade and investment relations are expected to grow strongly in the coming years, according to Quan. Tran Bac Ha, chairman of the Bank for Investment and Development of Viet Nam, said drastic competition, high transport costs, and payment issues were among difficulties Vietnamese firms face when exporting to Russia. He said local firms hoping to enter the market had to study it carefully to come up with appropriate strategies. They would also need to focus more on improving their competitiveness, he added. According to the Ministry of Industry and Trade, Russian firms are interested in several sectors in Viet Nam like oil and gas, mining, transportation, telecommunication satellites, auto, and seafood. Vietnamese firms eye setting up centres in Russia to distribute consumer goods and construction materials. Viet Nam's main exports to Russia include telephones, computers, electronics parts, garment and textiles, footwear, seafood, coffee, cashew, rice, vegetables, and fruits, while it imports petroleum products and iron and steel. Little Viet Nam project replicates famous ancient towns Syrena Viet Nam is replicating the unique architecture of Ha Noi's Old Quarter and Hoi An's Ancient Town in a project called Little Viet Nam. The firm, a subsidiary of the BIM Group, is developing the project in Halong Marina Urban Area in Quang Ninh Province's Ha Long City. Covering 3.3 ha, Little Viet Nam, with 109 three-and-a-half-storey houses, including 80 units in Ha Noi architecture (Little Ha Noi) and 29 units in Hoi An architecture (Little Hoi An), aims to integrate values and investment opportunities by replicating original architectural features,lifestyles and traditional businesses of Ha Noi and Hoi An in harmony with modern designs. Little Viet Nam is expected not only to become a developed trade community and an attractive destination for both domestic and international tourists, but also contribute towards honouring and preserving Vietnamese culture, said Doan Quoc Huy, Syrena Viet Nam's deputy general director. The first 15 units of Little Viet Nam will be put on sale on September 12 with support policies such as for doing business, subletting and service fees, provided to the buyers by the project's investor. The construction of the project began in July and is scheduled to be completed in September 2015. KSH shares soar as VN-Index shows strong performance Hamico Mineral Group (KSH) said its business was operating normally after 12 successive sessions of hitting the ceiling price. From closing at VND6,600 (US$0.3) on August 14, KSH concluded last Friday at VND13,100 ($0.62). "The VN-Index has performed well in August and had a good impact on our company's shares," a company representative said. KSH also plans to organise a shareholders' meeting this month to discuss the increase in the company's charter capital and the addition of more lines of business. Brokerage firm Thien Viet to list 43m shares The HCM City Stock Exchange late last week announced that Thien Viet Securities Company, a brokerage company, had filed for the listing of 43 million of its shares. The company has a VND430-billion ($20.3 million) capitalisation and has earned more than VND45 billion in the first half of this year. Mobile World earns VND52b in profits in July Mobile World Group (MWG) recently announced its revenue and profit in July reached VND1.2 trillion ($56.6 million) and VND52 billion ($2.45 million), respectively. The company earned VND8.2 trillion ($386.8 million) in revenue for the first seven months of this year, completing more than 60 per cent of its annual target, and VND360 billion ($16.98 million) in profit, accomplishing 80 per cent of its fiscal plan. After listing for just a month and a half, the company's share price has increased by 66 per cent. Russia removes ban on three more Vietnamese seafood exporters Russia’s Veterinary and Phytosanitary Surveillance Service (VPSS) has lifted the ban on seafood imports from three more Vietnamese enterprises, according to NAFIQAD, Vietnam’s quality control agency on agricultural and seafood products. Those removed from the banned list include dry seafood exporter Anh Long Company and two catfish exporters, Tan Phu Trung Food Processing Factory and AGF9 Frozen Factory of the An Giang Fisheries Export and Import Company. These enterprises are allowed to resume exporting because they have met Russia’s food safety standards. Earlier, the ban was also removed for seven Vietnamese seafood exporters, namely Hung Vuong Corporation, Hung Vuong - Vinh Long Co Ltd, Ba Lai Seafood Processing Plant under the Ben Tre Forestry-Seafood Import-Export JSC, Hiep Thanh Seafood Processing JSC, Hung Ca Co Ltd, Minh Phu Seafood Corporation, and Minh Quy Seafood Co Ltd. In 2013, Vietnam’s seafood exports to Russian brought in revenue of US$103.3 million. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR