BUSINESS IN BRIEF 24/10 PM approves action plan to boost shipbuilding The Prime Minister issued a decision on October 22 to approve an action plan to develop the shipbuilding industry. The decision aims to implement Vietnam’s industrialisation strategy as part of the cooperation framework with Japan until 2020, with a vision towards 2030. An emphasis will be placed on improving infrastructure and human resources, developing support industries, ship repair services, and exports, as well as building capacity for research and development (R&D). During the last quarter of this year, the Ministry of Transport aims to generate funds to support the industry in 2015-2020 and establish strategic partnerships between prospective investors and shipbuilders. In addition to setting up a R&D centre, the ministry will concentrate on building vessels that are domestically and globally competitive in an effort to stimulate the support industries. In the same period, the Ministry of Finance will review tax incentives for imported materials and spare parts, and propose a list of beneficiaries in line with the tariff reduction roadmap for the ASEAN Free Trade Area (AFTA) and the World Trade Organisation (WTO). The ministry will also work harder to simplify administrative and customs procedures. Vietnam currently has 120 shipyards that build different types of ships, with the lowest capacity of 1,000 DWT, which provides an important technical basis for the expansion of the entire industry. HCM City needs 30,000 new workers in November Enterprises in the southern economic hub of Ho Chi Minh City need to employ 30,000 new members of staff in November, including 10,000 seasonal contracts to fill orders from domestic and foreign buyers. Temporary workers are required in a number of sectors, including garment production, information technology (IT), sales and marketing, services and hospitality. Manual labour is in high demand, accounting for 33 percent, followed by graduates and postgraduates with 14 percent and technicians with 7 percent, the municipal Centre of Forecasting Manpower Needs and Labor Market Information (FALMI) announced on October 22. Demand for workers in October increased by 40 percent compared to the previous month, mainly in IT, electronics and mechanics, food technology, real estate, and marketing and sales. In October, the number of job seekers rose by 10.7 percent, which the majority of applicants trained in IT, architecture, construction, management, sales, and accounting. Graduates make up as much as 58.3 percent of job seekers. The private sector, especially foreign-owned businesses, offers the most employment opportunities, accounting for 78 percent of recruiters. Almost 70 percent of positions require candidates to have previous work experience. 4,000 workers strike against company regulations   In response to rules seen as draconian by employees, workers at Vina Duke Company in HCM City have gone on strike. Staff members at the company are allowed 150 minutes per month bathroom time, with any extra time used in the toilet being deducted from their salaries. This, among other strict rules enforced by the company, has caused a backlash from their workers, who went on strike en mass in the past week. The striking workers reached numbers of nearly  4,000. Representatives for the employees said that, since September, the company suddenly reduce the pay for piece-work by VND200 per unit without any explanation, without raising the base salary. The company also put into place other strict regulations including the time limits on bathroom breaks. Employees say that the restrooms are located far away from work stations, which makes it difficult for them to fulfill the requirements. Salary deductions for violating the company policy amount to VND450,000. Workers are also forced to pay for company meals, which they say is of very poor quality. Initially, when the protest began, there was no negotiation from management. The only communication from the board of directors has been signboards pasted on the gates demanding that employees resume work immediately, and without pay for the days they have been absent. However, on October 21, a company representative was sent to arbitrate. Since then, representatives from the Trade Union of Hooc Mon District have said that the company has given signals they may be willing to reduce the price of meals and build more convenient restrooms. The Trade Union of Hooc Mon District said that following the workers’ strong reaction, director of the company said the meal price will be adjusted and new rest-rooms will be built. Demands for a raise in pay, however, seem to have fallen on deaf ears. The company has said that any salary increases would have to be prompted by new government regulations on minimum wage. October CPI: Hanoi up, HCMC down The Hanoi consumer price index (CPI) for October rose 0.04% against September and by 2.72% compared to the same period last year, according to the Municipal Statistics Office. Among 11 groups of products and services in the CPI basket, public traffic service dropped by 1.07% due to falling petroleum prices. Other 10 groups showed a slight increase in value. Foodstuffs and dining-out services experienced a price hike of 0.13%, followed by housing and building materials, electricity, water and fuel which grew by 0.04% over September. In October, gold price declined by 3.98% while that of the US dollar rose by 0.13% on-month. *** The October CPI for Ho Chi Minh City went down by 0.03% from the previous month with foodstuffs and dining-out services down in the second consecutive month, which fell by 0.08%. A decline was recorded for housing and building materials, electricity, water and fuel (down 0.09%), and garments and textile-headwear-footwear (down 0.02%). German firms to look at local market during Asia-Pacific meet A meeting of leading German companies in Vietnam will be an opportunity to promote trade and investment between Vietnam and Germany, and other European Union countries, said experts. According to the official website of the Asia-Pacific Conference of German Business (APK), its 14th conference will be held from November 20 to 22 in HCM City. In recent years, Vietnam has attracted an increasing number of foreign investors due to the country's fast-growing economy and geographical advantages. With the conference taking place in HCM City, Vietnam will host this event for the very first time. The conference has been organised biannually in Asia since 1986, and has become the largest German networking event in the region, attracting political as well as business leaders, reported the website. This year's conference theme is "Understanding Trends and Perspectives". The combined economies in the Asia-Pacific region are playing an ever-more important role in global trade, as per their share in world population and GDP. The 14th APK will focus on industries and trends of the future, where co-operation between businesses in Germany and the Asia-Pacific can thrive. During the two-day conference, some 750 participants will have ample opportunities to speak, listen, network and contemplate concepts and solutions for a sustainable future. German Ambassador to Vietnam Jutta Frasch said that more than 160 German companies in Vietnam create jobs and contribute to the development of the Vietnamese economy. A clear sign of trust of the German companies in Vietnam is the APK conference being held this November in HCM City. Frasch said that Vietnam has had fast and strong economic integration via free-trade agreements and the Vietnamese government has strived to complete economic policies. These are attractive points for German companies, reported the Vietnam News Agency (VNA). Meanwhile, Vietnamese enterprises have limited foreign direct investment opportunities in Germany due to capital and trade barriers, she said. However, a few Vietnamese enterprises have opened their businesses in Germany, such as FPT and Vietinbank. The free-trade agreement between Vietnam and the EU is expected to be a chance to increase investment between Germany and Viet Nam. Germany will transfer technology to Vietnam, while Vietnam can export more consumer goods to Germany and other countries in the EU, she said. The Trade Office of Vietnam in Germany said that the ongoing industrial revolution in Germany will bring good opportunities for Vietnamese companies in receiving technological transfers from Germany. Germany will also be an attractive market for Vietnamese goods and a favourable place for local products entering other EU markets, including France, Netherlands, Austria, Poland and Belgium. According to the Europe Department of Vietnam's Ministry of Industry and Trade, the trade value between Vietnam and Germany reached US$4.95 billion by August 2014. Germany has had 238 investment projects in Vietnam with a total registered capital of $1.34 million. Many leading German hi-tech brands such as Mercedes Benz, Siemens, Bosch, Adidas and Xella have had efficient operations in Vietnam. Several large German firms, therefore, see Vietnam as a potential market that can replace China. Exports to grow by 15.9% this year: HSBC Vietnam is quietly fixing itself. After years of credit-intensive growth, with most capital channelled into the inefficient state-owned sector, the country is taking a breather and focusing on a more sustainable growth strategy – exports. According to HSBC report on Asian economics in the fourth quarter of this year, despites the global slowdown Vietnam’s exports are punching above their weight, expanding by 14.1% in September. Thanks to slower growth of imports, the trade balance also turned to a slight surplus of US$2.5 billion. HSBC expects export growth of 15.9% this year, taking the export-to-GDP ratio to 81.4%. The economy will likely expand by 5.7% this year and accelerate slightly to 5.8% in 2015. HSBC hopes that some good news is likely ahead in end-2015 and 2016. The EU-Vietnam FTA is expected to conclude end-2014 or early 2015. The Trans Pacific Partnership (TPP) initiative will likely boost Vietnam’s manufacturing sector competitiveness. Firms that want to take advantage of its trade liberalisation policy are setting up shops in the country, boosting FDI inflows. Agricultural exports are also gaining momentum, although more work is needed to raise value-added rather than competing on pure volume. The government’s fiscal management is improving. In the past decade, the economy suffered from too many wasteful projects that did not improve productivity. Public projects are increasingly more scrutinised and more demand-driven. The government is focusing on key infrastructure projects to alleviate bottlenecks such as highways and distribution. A high non-performing loan ratio and the still inefficient state-owned sector remain a concern. However, the State Bank of Vietnam (SBV) will likely accelerate the pace of reform towards the end of the year and into next year, although the reforms will probably increase the SBV’s supervisory capability within the regulatory framework. The government plans to equitize key firms in the fourth quarter of this year, although the state will retain majority stakes in these ‘strategic’ firms. VinGroup to convert international bonds into shares Property developer VinGroup will issue an additional 153.3 million shares worth VND153.3 billion (US$7.3 million) to convert international bonds into shares in the last phase. According to its filing to the State Securities Commission and the HCM City Stock Exchange yesterday, the group's charter capital will increase from VND14.38 trillion (US$681.5 million) to VND14.53 trillion ($688.6 million). Selling pressure led by bondholders in the past month drove VinGroup's share price down nearly 8 per cent from VND52,000 ($2.46) per share to VND48,000 ($2.27). As of October 21, foreign investors sold out VinGroup shares for 19 sessions in a row with a total volume of up to 23.8 million shares, valued at VND1.122 trillion ($53.2 million). VinGroup shares continued to slide yesterday to close at VND48,000 per share with more than 2 million shares traded. The group is the largest listed real estate company in the stock market, with market capitalisation of nearly VND69 trillion ($3.27 billion) as of yesterday. Early this month, rating agency Fitch Ratings affirmed VinGroup long-term foreign and local currency issuer default ratings (IDR) at ‘B+' with a stable outlook. Fitch expects Viet Nam's improving economic conditions to accelerate property sales growth. Its new projects, Vinhomes Nguyen Chi Thanh and Vinhomes Tan Cang, will provide the majority of the funding needed for capital expenditure from the latter half of this year. Viglacera signs MoU with Cuban construction giant Construction material producer Viglacera Corporation has signed a memorandum of understanding with Cuba’s El Grupo Empresarial Industrial de la Construccion (Geicon) to set up a joint venture that will invest in two factories making bathroom fixtures and tiles in San Jose and Santa Cruz. Accordingly, Viglacera and Geicon are going to jointly invest in the two factories and Viglacera is sending specialists to work there. The two sides plan to complete administrative procedures for setting up the joint venture next year and plan to start operations in 2016. The Cuban market has a high demand for construction materials as the country is encouraging investment in housing and tourism infrastructure. Since early 2014 Viglacera has sent two groups of technology specialists to work with construction material factories in Cuba. According to Nguyen Anh Tuan, Viglacera’s general director, the company’s products are now present in many countries around the world and its co-operation with The Business Industrial Construction Group (GEICON) will help it deepen its presence in the Cuban market and consequently raise its export revenue. GEICON, under the Cuban Ministry of Construction, is comprised of 24 companies throughout the country with a combined workforce of 16,000 people and annual sales of more than 220 million pesos ($8.3 million). Viglacera, which focuses on producing and selling construction material and developing industrial parks, infrastructure and real estate, reported $25 million in export earnings in 2013 and plans to increase this figure to $31.5 million this year. Viglacera has set a pre-tax profit target of VND270 billion ($12.67 million) for 2014. Textile businesses investing in advance of TPP Leading textile and garment businesses have expanded production, invested into technology and ensured access to raw materials in their drive to further increase revenues in the coming time. In early 2014 leaders of state-owned Vietnam National Textile Garment Group (Vinatex) announced to the press that if the Trans-Pacific Partnership (TPP) agreement was signed, the domestic textile and garment sector could reach $25 billion in export revenue before 2020 and the localisation rate could be raised from the current 45 per cent to 70-75 per cent. Pham Xuan Trinh, general director of Ho Chi Minh City-based Phong Phu Corporation (PPC) has unveiled an ambitious plan for the company aimed at posting $1 billion in revenue between 2015 and 2020 from the company’s VND1 trillion ($47.6 million) total investment. For the period 2015-2016 the company envisages pumping capital into a modern spinning line that employs 20,000 spindles and has an estimated production capacity of 3,200 tonnes per year. During 2018-2019 it plans to build another 20,000 spindle plant that specialises in top-grade fabric production. This ambitious plan would bring the company’s network of modern spinning plants up to 10, reported VnExpress. This year the company expects to achieve VND7.3 trillion ($347 million) in revenue, of which domestic sales are planned to account for one-third, and VND320 billion ($15.2 million) in pre-tax profits, bringing it closer to its goal of a billion dollars over the next five years. Viet Tien Garment JSC, one of the top players in the sector, has set its revenue target for this year at VND5 trillion ($238 million). According to the company’s first-half financial statement, Viet Tien posted VND2.5 trillion ($117.4 million) in revenue for the period, up 7 per cent on-year and reaching 51 per cent of the full-year plan. Its post-tax profits hit VND141 billion ($6.7 million). Last year, the company reached VND4.8 trillion ($228 million) in revenue, up 24 per cent against 2012. Executives at the company said they have scaled up efforts to consolidate traditional export markets while also tapping new markets to effectively utilise trade pacts Vietnam has signed with other countries. Similarly, some other big players such as Nha Be, Garco 10 and Garmex Saigon have reportedly invested in market research, branding, technology, design and new products to boost domestic market share. Pham Xuan Hong, deputy chairman of the Vietnam Textile and Apparel Association (VITAS) said the prospect of Vietnam joining the TPP has provided an impetus for local firms to invest in improving their export status, particularly in terms of the US market. “By that time, the target of a billion dollars over five years will be easy for some of the sector’s biggest players,” Hong told VnExpress. Hong also suggested that local textile and garment firms increase co-operation, develop a closed process from fibre making and spinning to garment production, and gradually shift from export processing to more active models such as ODM (in-house design and production before selling) to develop more sustainably. Russian, Vietnamese firms enhance connectivity Representatives from many Russian businesses in the fields of electricity, construction, underground, chemistry and petrochemistry met Vietnamese partners in Hanoi on October 22 to seek cooperative opportunities. According to the Vietnam Chamber of Commerce and Industry (VCCI), two-way trade turnover hit nearly US$4 billion in 2013 and around US$1.52 billion in the first seven months of this year, accounting for just 0.5% of Russia’s total import-export value. However, Vietnamese hi-tech exports account for a small proportion. The free trade agreement (FTA) between Vietnam and the Customs Union (Russia, Belarus and Kazakhstan) is expected to make a breakthrough in bilateral economic relations with the aim to raise bilateral trade value to US$7 billion in 2015 and US$10 billion in 2020. To obtain the target, VCCI Secretary General Pham Thi Thu Hang said, support from the two States and Governments and efforts of businesses are needed. The meeting will help Vietnam access new technologies from Russia to speed up infrastructure development and improve the economy’s competitiveness. Meanwhile, manager of the “Russia-Vietnam: New Economies” project Strozaeva Lubov Viktorovna said strengthening bilateral cooperation, especially in economics, science and technology, will further deepen the strategic partnership for mutual benefit. We proposed Vietnam coordination to hold an international conference in 2015 on prospective cooperation with Russian hi-tech firms, aiming to enhance bilateral technological ties, particularly among small and medium-sized enterprises, said Viktorovna. India rolls out red carpet for Vietnamese investors HCM CITY - Economic ties between Viet Nam and India have yet to match the vast potential and huge aspirations of their leaders, officials on both sides and entrepreneurs agreed at a meeting the Indian consulate held yesterday in HCM City to mark the launch of its "Made in India" campaign. Indian investment today in Viet Nam is close to US$1 billion and is all set to grow with the Tata Group investing around $2 billion in Soc Trang Province. - Photo pc2.vn Smita Pant, the Indian consulate general in HCM City, said India encouraged foreign investment in its market of 1.3 billion. Vietnamese investors were also welcomed and the country had rolled out of a red carpet, she said. "The potential is huge and as far as India and Viet Nam trade and investment relations are concerned, the business community is sitting on a gold mine, which needs to be explored." Besides online licensing, the Indian Government has also announced new policies for 24 sectors in which it is seeking investment, including construction, health, bio-technology, ports, aviation, railways, defence, and space, according to the diplomat. She said this month there would be a high-level Vietnamese delegation including businesspeople visiting India. Direct flights between India and Viet Nam are set to begin in less than two weeks' time. A memorandum of understanding for twinning HCM City with Mumbai is under discussion, and efforts are going on to open an Indian bank branch in HCM City, according to Pant. There is opportunity for India to get more investment from Vietnamese companies as Viet Nam is becoming one of the top investors in Myanmar and its investments in Bangladesh are growing. Both these countries border India's north-eastern region. "We call upon you to look at India with its huge market, privatisation exercise, ease of investment, and the commitment made by Prime Minister Narendra Modi himself to welcome investments," Pant said. Some Indian companies have shown interest in investing in wind energy, bio-mass, hi-tech agriculture, and infrastructure. Indian investment today in Viet Nam is close to US$1 billion and is all set to grow with the Tata Group investing around $2 billion in Soc Trang Province. Le Phuoc Vu, co-chairman of the Viet Nam - India Business Forum and chairman of the Hoa Sen Group, said India was Viet Nam's biggest market in South Asia and Viet Nam's sixth largest trading partner. Untapped potential Mohan Ramesh Anand, the chairman of the Indian Business Chamber in Viet Nam, said Vietnamese companies had many opportunities to invest in India. Vietnamese companies had invested more than $8 billion in more than 500 projects abroad, he said. Besides the traditional markets of Laos and Cambodia, they had also made significant investments in Russia, Malaysia, Algeria, the US, Cuba, Myanmar, and Bangladesh, but had only three projects in India worth $23.6 million, he added. According to the Foreign Investment Agency, India has 77 projects, most of them small, in Viet Nam to rank 27th among investing countries and territories. Bilateral trade is worth around $5.5 billion, and is expected to cross $7 billion by 2015 and $15 billion by 2020. Tat Thanh Cang, deputy chairman of the HCM City People's Committee, said ties between HCM City and India were a highlight of the bilateral relationship, with trade in 2013 worth almost $700 million. But he admitted that the co-operation did not match the potential or expectations of the two sides. Source: VIR/dtinews/VNS/VOV