BUSINESS IN BRIEF 29/10 PVcomBank, PVGas sign co-operation pact The Viet Nam Public Bank (PVcomBank) and the PetroVietnam Gas Joint Stock Corporation (PVGas) signed a comprehensive co-operation agreement in this Central Highlands city last Friday. The two sides will collaborate in such areas as depositing, payment, credit, investment, financial advisory and individual finance services. PVGas will prioritise the use of PVcomBank's services, while the bank will create specific products for the company. With this co-operation agreement, PVcomBank is committed to serving key projects of the oil and gas sectors, the bank said in a news release. PVGas is one of the major units of the Viet Nam Oil and Gas Group, or PetroVietnam. It contributed more than VND67 trillion (US$3.19 billion) to the sector's revenues, and about VND5.7 trillion ($271.43 million) to the State budget in 2013. HCM  City hosts international pepper conference More than 380 pepper producers, exporters, policymakers, consumers, and scientists from more than 25 countries are attending a four-day meeting that opened in HCM City yesterday. Besides analysing the latest happenings in the pepper market, they are also discussing technological progress and measures to sustain prices of the spice. W.D.L Gunaratne, executive director of the International Pepper Community (IPC), said during the last decade global production has not seen big change but prices have shot up, improving the livelihoods of small farmers. In the last six years Viet Nam has become the world's top producer and exporter, with shipments of over 120,000 metric tonnes a year, he said. Deputy Minister of Agriculture and Rural Development Le Quoc Doanh said pepper is an important spice consumed in most countries around the world. As the biggest pepper producer and exporter for the last 14 years, Viet Nam not only plays an important role in world trade but also prices, he said. But despite its achievements, Viet Nam's pepper industry faces a number of challenges, such as the large area requiring to be replanted, many stunted and overexploited pepper farms with diseases and decreased productivity, and climate change impacts. Do Ha Nam, chairman of the Viet Nam Pepper Association, said high prices have persuaded farmers to expand cultivation without any planning. They end up planting the crop on unsuitable land and overusing fertilisers, causing the plants to degenerate quickly and fall victim to diseases, he said. Pepper prices might remain high in the short term, but if production is not monitored carefully, there could be a glut, he warned. Gunaratne said sustaining the prices and enhancing development are the current concerns of the pepper sector. To sustain the growth, it is essential to look for new markets and technology and ways to reduce costs and improve quality, he said. Tran Kim Long, director general of the Ministry of Agriculture and Rural Development's Internal Cooperation department, said the supply of pepper needs to be balanced by promoting domestic consumption in IPC member countries, development of new products, and fostering trade with emerging markets through participation in exhibitions and conferences. Affluent markets are willing to pay high prices for foods conforming to stricter standards, he said. They need brand-name products, certificate of origin, and certification for sustainable production and trading and environmental effect, he said, adding that firms must pay more attention to these factors. Most pepper farmers in Viet Nam are small or medium-sized and so production costs are high. Besides, it is difficult for companies to procure large volumes of similar quality for processing and exports. Improving value and quality is the target for Viet Nam's pepper industry, Nam said. He urged processors to focus more on safety and hygiene and invest more in full-fledged processing, diversifying products, using modern technologies, and adapting to market requirement. Despite the financial and economic crisis, global pepper exports have been steadily increasing, going up from US$1.58 billion (equivalent to 250,780 tonnes) in 2011 to $1.9 billion (equivalent to 249,500 tonnes) last year, and are forecast to rise to $2.4 billion (equivalent to 247,500 tonnes) this year. Prices have increased significantly to stand at around $9,000 a tonne now. Viet Nam's exports topped a record $1 billion in the first 10 months of the year, as around 140,000 tonnes were shipped, he said. The country hopes to export 150,000 tonnes for $1.2 billion this year compared to 132,955 tonnes and $900 million last year. Its products are sold to over 100 countries and territories. The IPC comprises six members : Brazil, Indonesia, India, Sri Lanka, Malaysia, and Viet Nam — who together account for 85 per cent of the world's total production and exports. The roles of the individual IPC members as well as the IPC secretariat are very important to the overall co-ordination of production, stockpiling, and trade to sustain prices and avoid price uncertainties during the up and down cycles as has been happening in recent years, Doanh said. Today delegates will deliberate on current happenings in the industry and developments and programmes undertaken in producing countries. Tomorrow, they will discuss pepper trade and exchange information on the global market followed by a field trip to Ba Ria-Vung Tau Province on October 30. The event is being organised by the ministry together with the International Pepper Community and the Viet Nam Pepper Association. Short supply hits mango exports Mango exporters in the Cuu Long (Mekong) Delta face a serious supply shortage after the latest crop was hit by diseases, which has affected the quality of the fruit. Huynh Van Ba, deputy director of the My Xuong Mango Co-operative in Dong Thap Province, said the co-operative has got orders from mango exporters for more than 100 tonnes a month for shipping to South Korea and New Zealand, but can supply less than 10 tonnes because of a shortage of fruits meeting export quality. Japan too wants to import a large quantity of mangoes but requires them to look flawless with a smooth skin and without any scratches, he said. Diseases have caused more than 80-90 per cent of harvested mangoes to fall below export quality, he said. Mango farmers in Dong Thap, one of the delta's leading mango-growing provinces, use various methods to improve the quality of the fruit, including Vietnamese and global Good Agriculture Practice (GAP) standards. The province's Cao Lanh District has more than 3,600ha under mango and 90ha of them meet VietGap or global GAP standards. Vo Huu Hien, a member of the My Xuong co-operative, said with the application of VietGap standards, his 1.5ha yield more fruit and require less pesticides. The mangoes also fetch higher prices, he said. Many farmers use small bags to cover the fruits while on the trees to improve quality. Nguyen Dinh Tai, a member of the mango co-operative team in Cao Lanh's Tan Thuan Dong Commune, said he has been using the bags for the last two years and got good harvests. "My family earns a profit of VND60-70 million (US$2,800-3,300) a year from 3,500sq.m of mango orchards." Traders pay VND20,000 a kilogramme for fruits covered by bags, VND5,000-6,000 higher than for normal mangoes, he said. Farmers said the bags ensure beautiful looks and better quality than normal mangoes and protect the fruits for diseases. Nguyen Hoai An, secretary of the Tan Thuan Dong Party Committee, said the technique of using bags began in 2012 and too off this year thanks to the province's agriculture extension programmes. Of Tan Thuan Dong's 536ha of mango, the technique is practised on more than 100ha, he said. Nguyen Thanh Tai, deputy director of the Dong Thap Department of Agriculture and Rural Development, said one of the main tasks under agriculture extension programmes is to persuade farmers to use bags. The department would petition the People's Committee to draw up support policies for farmers growing mangoes in the off-season from May to August, he said. Dong Thap has nearly 10,000ha under mango, mostly of the Cat Chu variety. Some 95 per cent of the output is sold domestically and the rest is mostly exported to China. The delta has about 41,000ha of mango, with Cat Chu and Cat Hoa Loc accounting for nearly 40 per cent, and produces 420,000 tonnes, according to the Can Tho University's Cuu Long Delta Research and Development Institute. Tien Giang is another of the major mango-growing provinces. OceanBank committed to ensuring liquidity after arrest The new chairperson of Dai Duong Commercial Joint Stock Bank, better known as OceanBank, has told Tuoi Tre that thebank will ensure liquidity “in any given situation”. "In any given situation, all the interests of customers, partners are guaranteed,” Nguyen Minh Thu, new chairperson of the bank, asserted. Thu, who replaces Ha Van Tham, OceanBank’s former chairman who has been temporarily detained, said OceanBank is steadfastly sticking to its targets including stable, sustainable, and secure operations. The bank is now focusing on handling bad debts and ensures stable growth in accordance with the policy of the State Bank of Vietnam (SBV), she said. On the other hand, OceanBank continues to further enhance the value and assets of the shareholders, to ensure the benefits of all customers, she added. At the same time, to meet the needs of customer withdrawals, according Thu, Ocean Bank has prepared assets with high liquidity. Specifically, VND15 trillion (US$705 million) in central bank bills and government bonds can be converted into cash at any time. In addition, banks also have a large amount of deposits and cash balance at the central bank. Ocean Bank's liquidity situation is still being managed well, Thu told Tuoi Tre. "The business activities of Ocean Bank remained stable as usual, and OceanBank is committed to ensuring liquidity,” she said. Relating to the arrest of Ha Van Tham, the board of directors of Ocean Joint Stock Group (OceanGroup) has assigned Le Quang Thu, deputy chairman, to temporarily assume the position of the chairman of OceanGroup, not to be confused with OceanBank. Tham, former chairman of both OceanGroup and OceanBank, has been charged and will be detained for 4 months starting the end of last week for violating regulations on lending activities of credit institutions at OceanBank. OceanGroup has a chartered capital of VND3 trillion (US$141.6 million) and has interests in real estate, banking, securities, retail, media and hotels, according to Reuters. On Friday, Tham was arrested for investigation into financial irregularities. He was charged by police of violating regulations on granting loans as ruled in Article 179 of the Criminal Law. As of Monday, OGC share of OceanGroup dropped 6.42 percent, about VND700, day on day to VND10,200 per share. By the end of Friday, OceanGroup shares fell as much as 15 percent since Wednesday on Vietnam's main stock market. HCM City promotes stable business operations, production Chairman of Ho Chi Minh City’s People’s Committee Le Hoang Quan has asked relevant departments, sectors and district authorities to continue creating favourable conditions to promote stable business operations and production in the city in the last months of the year. In a meeting held in HCM City on October 27 to review the ten-month socio-economic development and key tasks for the rest of the year, Quan requested the management boards of industrial parks and export processing zones to simplify their administrative procedures, and develop and upgrade their infrastructure in an effort to attract more foreign-invested projects, especially in high-tech. Quan said most economic targets have been met, with growth rates higher than during the same period in 2013. In the first ten months of this year, the city’s industrial production value climbed to 6.8%, 0.9% higher than that during the same period last year. In October alone, retail sales of goods and services were estimated at nearly VND55.9 trillion (US$2.62 billion), up by 10.6% against October last year. For the January-October period, the retail sector recorded an increase of 12% in revenue to about VND530.5 trillion (US$24.9 billion). Meanwhile, import-export turnover over the last ten months hit nearly VND28 trillion (US$1.3 billion), up by 8.87% compared to the same period last year. The city took the lead in attracting foreign direct investment (FDI), granting investment certificates to 332 new projects and allowing 107 others to increase their capital, with a total value of US$2.9 billion, representing an increase of 97.6% compared to the same period last year. Dao Thi Huong Lan, Director of the municipal Department of Finance, said the State budget reached VND213 trillion (around US$10 billion) in the reviewed period, accounting for 94.15% of the estimate for the whole year, a year-on-year increase of nearly 13.5%. The programme to connect banks and enterprises, which aims to help businesses operating in the city to access loans, proved effective with the total assistance capital reaching VND37.48 trillion (US$1.76 billion), VND7.48 trillion (US$351.5 million) more than the target for the 10-month period, actively helping enterprises solve their capital difficulties. In the remaining months of 2014, the city will focus on producing goods that will be in high demand on the occasion of New Year. Promotional activities will be intensified and campaigns to encourage people to use locally produced goods will be run. Vietnam violates key economic principles, says minister Bui Quang Vinh, Minister of Planning and Investment pointed out that Vietnam has violated three key economic principles in state budget spending at a National Assembly discussion last week. According to Vinh, the main violation has been in salary raises for state employees, which have grown faster than higher than productivity. In many other countries, salaries in the sector are based on improvements in productivity. Vinh also commented that social security spending is higher than the growth of the state budget. The third red flag raised by Vinh was that recurrent expenditures have exceeded growth in state budget revenues, including investment and development. He added that the policy currently in place is inadequate to deal with real budgetary problems. According to him, Vietnam’s investment and development expenditure has been falling, currently accounting for only 17% of the country’s total state budget spending, the lowest ever recorded. Meanwhile, recurrent expenditure makes up for 70%, which creates a serious problem for the national economy, he said. The solution, says Vinh, must consist of new adaptations of current economic institutions, infrastructure and the quality of human resources in the country. Prime Minister Nguyen Tan Dung recently commented that Vietnam’s public debt has been on an alarming rise. He added that the main task is to focus on management of the state budget in order to ensure the targeted budget deficit. Under the government’s proposal to the National Assembly, this year, the state budget deficit should remain at 5.3% of the GDP, or VND224 trillion (USD10.6 billion). State Bank to continue restructuring banking system The State Bank of Vietnam has approved projects to restructure eight out of nine weak banks determined since 2012. It will submit the Government a scheme to reorganize the rest one and instruct commercial banks to continue Mergers and Acquisitions (M & A) operations. Two years after restructuring, the banking system has seen a reduction of five weak banks through M & A deals. The five banks include De Nhat and Tin Nghia, which have merged into Saigon Bank to create SCB Bank; Hanoi Housing Bank and Saigon Hanoi Bank merged into SHB; Western Bank and PetroVietnam Finance Corporation joined up to form PVcombank. Dai A Bank, HCMC Development Bank and Société Générale Viet Finance (SGVF) Company merged into HDBank. Among the rest four weak ones, Dai Tin Bank and Nam Vietnam Bank have been renamed Vietnam Construction Bank and National Commercial Bank respectively. Tien Phong Bank is carrying out self-restructuring measures. GP Bank waits for the Prime Minister’s opinion on capital contribution from foreign credit institutions. Governor of the State Bank Nguyen Van Binh said that most restructuring projects including M & A deals have been done on a voluntary basis without any mandatory intervention from the State Bank. The restructured banks are now conductiong measures to streamline all fields including finance, operation &management, and repair mistakes under supervision of the State Bank. The State Bank has agreed with restructuring 24 out of 25 normally operating banks. Of these, 18 projects have been approved. With the policy of reducing the bank number to 20-25, other under performing banks will have to implement M & A operations. Of these, Southern Bank is about to merge into Sacombank and Mekong Bank into Maritime Bank. Governor Binh said that all commercial banks have submited their restructuring plans for approval. Four out of five state-owned commercial banks have been equitized, except Agribank, because Agribank has showed a lot of limitations. However, a State Bank’s project is also being conducted to restructure it. To date, Agribank Members’ Council has been changed to improve its management ability. Saigon-Hanoi Bank named most innovative bank in Vietnam Saigon-Hanoi Commercial Joint Stock Bank (SHB) has been honored by the International Finance Magazine as the "Most Innovative Bank in Vietnam" in 2014, becoming the first Vietnamese commercial bank to get the award. With a large readership in over 185 countries around the world, the London-based financial magazine’s awards have become a benchmark to evaluate the performance and credibility of financial institutions since it is dedicated to providing news, analysis, and commentary for the global financial community. The "Most Innovative Bank" award is based on the criteria of creativity and innovation in banking business operations. Besides assessing information provided by the bank itself, the IFM's assessment process is conducted independently, based on the evaluation of information on the bank through third party sources and surveys from partners and customers of the bank. In 2014, SHB's products, including "SHB-Manchester City Visa co-branded debit card", "online saving", "savings with floating interest rates", and "sporting accounts", have been appreciated for their creativity and innovation. Vietnamese shrimp exporters seek to expand markets Vietnamese shrimp processors and exporters should take advantage of a sharp fall in global supply caused by the early mortality syndrome (EMS) to seek and expand their markets, said Vice President of the Vietnam Association of Seafood Exporters and Producers (VASEP) Nguyen Huu Dung. According to VASEP, the increasing demand of shrimp in the US has pushed up the shrimp prices in India, Thailand, Indonesia and Vietnam, which are major farming countries, in recent times. Apart from taking measures to expand export markets, enterprises should strictly manage their supply chains to proactively tackle the imposition of antidumping duties on Vietnam ’s shrimp products from foreign markets as well as control the quality of products, Dung added. In the first eight months of 2014, the shrimp export made up 50 percent of Vietnam’s seafood export value, up 8.8 percent compared to the same period last year. During the period, the export to the Republic of Korea, Vietnam ’s fifth largest shrimp importer, increased by 115 percent year-on-year, while that to the European Union (EU) nearly doubled. Nguyen Quang Huy, Vice Chairman of the My Thanh Shrimp Association of the Mekong Delta province Soc Trang said it is not arduous to seek new markets for Vietnamese shrimp products, especially when key farming countries such Mexico, Thailand and India are meeting with difficulties in production. Vietnamese enterprises need to make the most of the situation to raise their market share in existing markets as well as look for new ones, he noted. Statistics from the Vietnam Directorate of Fisheries under the Ministry of Agriculture and Rural Development showed that the farming area strongly increased in almost localities across the country, especially in the Mekong Delta provinces. In the last nine months, the growing area was 663,000 ha, up 5.2 percent against the same period last year. The total output reached 395,000 tonnes, representing a year-on-year increase of 50 percent. According to VASEP, the shrimp export turnover in 2014 will likely exceed 3.5 billion USD if diseases are well controlled and good sales to markets are maintained. Public debt disadvantages new airport project, Transport Minister On the sideline of the 13th National Assembly’s 8th session on October 21, Minister of Transport Dinh La Thang said that construction of Long Thanh International Airport was necessary but disadvantageous at that time because of public debts. According to Minister Thang, although the Government has reported that public debt is under control, it has quickly increased with not high solvency. Construction of Long Thanh International Airport is necessary to reduce pressure for Tan Son Nhat International Airport which will become overloaded in 2025-2030. The Tan Son Nhat Airport cannot be broadened because it will require US$9 billion for site clearance and relocation of 500,000 people surrounding the airport. In case it can be done, opening a link road to the airport is impossible. The ministry has carefully calculated measures to reduce pressure for the Tan Son Nhat Airport and found that the construction of Long Thanh Airport is more reasonable, said Mr. Thang. However, the problem is financial source as the project will require US$7.8 billion merely in the first phase from 2025-2030. Of these, the State Budget will spend VND24 trillion (US$1.13 billion) for site clearance, resettlement and building of tax and customs headquarters. This will put a financial burden of VND5 trillion a year on public debts in the five year phase. The rest amount is expected from Official Development Assistance source, Public Private Partnership, and investors. Minister Thang will present the project to the NA for collecting opinions during the NA session on October 29. If the NA approves the project, the Government will complete and submit a report in the next session. Ba Huan Company offers Omega-3 enriched egg Ba Huan Co., Ltd. - one of the leading fresh egg suppliers in Vietnam has just launched a new product to the market named Omega-3 enriched egg. The Omega-3 egg is product from the Hy-Line chicken, a high-quality chicken breeding from the US. It is used the European processing technologies, Moba that able to kill 99.9 percent of germs. Ba Huan has cooperated with the Hy Line International, a world leader in poultry-layer genetics, to name the sole Vietnamese company to supply Hy-Line chicken. An Omega-3 enriched egg costs VND 4,700. IMF: VN’s public debts may reduce Viet Nam’s public debts may reduce to the 45% level in the future as set by the Government in the Strategy on Public Debts and National Foreign Debts in the 2011-2020 period and with a vision to 2030, according to the International Monetary Fund (IMF). According to the updated report on Viet Nam’s economic situations, the IMF revealed that the economic situation has been improved compared to the previous year. The IMF noted Viet Nam’s success in controlling inflation under single- digit rates and increasing the foreign reserves. Referring to the slow growth rate in the recent years, the IMF forecasted that the growth will recover in the upcoming years. The IMF also hopes that Viet Nam will soon complete the negotiations of the Trans-Pacific Partnership (TPP) and the Free Trade Agreement (FTA) with the EU in the future, which create chances for Viet Nam to get access to official export markets and promote reforms. Viglacera receives international quality awards The Viglacera Float Glass Company (VIFG) was honoured with the World Quality Commitment (WQC) awards at a ceremony at Concorde La Fayette in Paris on October 25. The VIFG has achieved the QC-100 TQM (Total Quality Management), which is based on customers’ satisfaction, communication strategy; measurement, information and data analysis; leadership; plan development, decision making; human resource; training; production process and quality; financial and business results; ISO 9000 and TQM. The company was selected among nominees from 118 countries by the world leading experts in quality and service. The evaluation was also conducted at the nominees’ production sites. According to VIFG CEO Nguyen Minh Khoa, international experts were surprised by the company’s development and products which meet European quality requirements. For the past 12 years, the company has devised strategic development plans based on internal strength and modern technology. The award, which proves the VIFG’s vigorous development with internationally recognised quality and services, is expected to help the company promote its high-quality products in the country and create conditions for it to access other markets in the region and the world. WQC is an annual international award initiated by the Business Initiative Directions in 1986 to honour organisations and businesses around the world for their outstanding achievements in business management and brand name promotion through commitments in their services’ quality to the community. The BID, established by business leaders from 100 leading countries and based in Madrid, has been the leading organization worldwide in promoting quality culture in top businesses. Soc Trang hosts Mekong Delta Economic Cooperation Forum The Mekong Delta Economic Cooperation forum (MDEC) will be celebrated in Soc Trang province from November 5-7, announced by the Soc Trang People’s Committee. The annual forum has focused on agricultural restructuring in the Mekong Delta region as well as creating favorable opportunities for businessmen in the Mekong Delta, Ho Chi Minh City and Ha Noi to invest in the Mekong Delta region’s agricultural industry. Deputy Chairman of Soc Trang People’s Committee Lam Van Man said that the forum will jointly be hosted by the Steering Committee for Southwestern region; the central ministries, departments; the HCMC People’s Committee and the People’s Committee of 13 rural provinces, aiming to strengthen cooperation between locals in the Mekong Delta region with the central ministries, departments across over the country. This year’s MDEC forum will coincide with the Oc Om Boc festival- Ngo boat race festival. These festivals are considered as a longstanding traditional festival of Khmer ethnic group and it will be a major activity in this year’s MDEC, aiming to preserving and promoting traditional values, cultural heritages and economic- social development of the Mekong Delta in general and Soc Trang in particular. The Ngo boat race festival is forecasted to attract the participation of 50-60 teams from the provinces in the Mekong Delta region. Over past seven years, the MDEC has taken place in Ho Chi Minh City, Can Tho, An Giang, Ca Mau, Tien Giang and Vinh Long. SHTP attracts over US$ 4 billion investment capital Saigon High Technology Park (SHTP) celebrated its 12th-birthday ceremony on October 24. At the ceremony, Prof Le Hoai Quoc, director of the management board said SHTP to date has attracted 67 projects with total investment capital of over US$ 4billion. Over past 12 years, the production value reached over US$ 9 billion, including exporting goods. SHTP has gathered professional skill human resource, including a number of staffs graduated colleges and the universities rated around 40 percents of total employees. However, Dr Le Hoai Quoc acknowledged that the import value for components and equipment of the enterprises are still high with an estimate of approximately US$ 8 billion. In the 2014- 2020 period, SHTP will continue to focus on attracting professional skill enterprises as well as promoting its advantages in order to become the largest high tech center in the country in general and in Southern region in particular. Speaking at the ceremony, Deputy chairman of the city’s People’s Committee Le Manh Ha affirmed that SHTP marked its twelfth –birthday ceremony with the attraction value of US$ 1.8 billion, accounting for almost 2/3 of the city’s total investment capital in 2014, meaning with such a strong growth, SHTP has proved its development potential about information technology sector. SHTP is located in Tan Phu Ward, District 9 which known as one of Vietnam’s only two national high tech parks hold leading position in Foreign Direct Investment (FDI) capital attraction. Bright prospects for Phu Quoc Island’s development Phu Quoc Island, dubbed the Pearl Island, in the southern province of Kien Giang expects to see a new boost to its socio-economic development with the planned launch on November 1 of two international air routes connecting the island and Singapore and Cambodia’s Siem Reap. Accordingly, the national carrier Vietnam Airlines will run two flights a week between Phu Quoc and Singapore by A320 aircraft from November 2 and three flights a week between Phu Quoc and Siem Reap by ATR-72 planes from November 18. Representatives from Korean Air and Hanjin Travel company of the Republic of Korea recently visited Phu Quoc to study possibilities for a direct air route linking the island with the Republic of Korea’s Incheon city. In addition, Kien Giang province and the Ministry of Transport have approved a project worth more than 1.2 trillion VND to build an international sea port in Duong Dong town, with a capacity of 105,000-190,000 passengers per year by 2020 and 350,000-550,000 passengers a year by 2030. In line with the plan to turn Phu Quoc into a special administrative-economic zone and an international tourism hub, various key infrastructure projects are underway on the island. The island is now connected to the national electricity grid. A road system around the island is also about to be completed, thus helping facilitate the travel of locals and tourists. Vice Chairman of Phu Quoc People’s Committee Huynh Quang Hung said many tourism projects, including several upscale hotels and resorts, are being implemented on schedule, while a number of international groups have also come to survey the business environment on the island. According to Phu Quoc Island’s investment and development management board, the island has to date licensed 112 investment projects. They cover 4,850 hectares of land with the total capital of more than 135 trillion VND (6.43 billion USD). As of now, 18 projects worth 6.85 trillion VND have begun operating, contributing importantly to the rapid development of the island. Located on the Vienam-Cambodia-Thailand marine economic corridor, Phu Quoc island district covers more than 589sq.km with a population of over 96,940. It comprises 27 islands with Phu Quoc being the largest. As a tourist hub in Kien Giang, Phu Quoc, dubbed the Pearl Island, has also earned reputation worldwide. Phu Quoc Airport welcomed more than 5,600 flights with as many as 666,000 passengers in the first eight months of 2014. Over the past eight years, Phu Quoc’s economy has seen a strong development towards tourism and services, with average growth of 26 percent a year and per capita income of 82 million VND a year. HCM City hospital dumps untreated wastewater Orthopedics and Rehabilitation Hospital in Tan Binh District, HCMC was caught red-handed on Tuesday discharging untreated wastewater into the environment. The HCMC People’s Council on Tuesday in collaboration with the Department of Health, the Department of Natural Resources and Environment and Tan Binh District authorities conducted an inspection into the treatment of wastewater and garbage at the hospital. Huynh Cong Hung, head of the Social and Culture Commission under the Council, said the hospital uses up to 120 cubic meters of water a day on average but its treatment system could only handle 50 cubic meters, meaning the balance is discharged untreated into the environment. The hospital’s dumpsite without covers is also placed too close to the residential quarter. The authorities ordered the hospital’s leaders to quickly isolate the dumpsite from the residential area with covers installed and raise the capacity of its treatment system in line with the amount of water used to prevent environmental pollution. Apart from Orthopedics and Rehabilitation Hospital, there are three others in the city that have also repeated the same violation. Huynh Van Biet, deputy director of the city’s health department, said these four hospitals attributed the problem to the limited funding for upgrading and building wastewater treatment facilities. Meanwhile, the health department expects that all central hospitals in the city will be able to handle wastewater thoroughly in line with environmental standards in the near future. FMCG consumption tumbles for first time The consumption of fast-moving consumer goods (FMCG) in urban markets tumbled in volume in the third quarter for the first time and barely increased in value. The market research company Kantar Worldpanel said the urban FMCG consumption growth rate in Q3 stood still at 0.4% in value and down 1.5% in volume year-on-year. Among five major sectors of FMCG, household products fared the poorest as consumers tightened spending and reduced purchases of products such as fabric softener and floor cleaner. Meanwhile in rural areas, the growth rate was pulled down to one digit level in Q3 of 2014 after months of maintaining two-digit growth. The rural FMCG consumption rose by 8.7% in value and 6.2% in volume. Food industry grew better than the other sectors in both value and volume. Although consumers cut down expenses for cosmetic products, they consumed a large amount of nutritional drinks. In Q3, buckwheat beverages with chocolate flavor in liquid form, for instance, grew 38% in volume year-on-year. Yogurt sales in rural areas went up by 47% in consumption volume due to an increase of 15% in the average household consumption while the customer base also expanded by 600,000 new households. Froman hails VN in TPP talks U.S. Trade Representative Michael Froman spoke highly of Vietnam’s efforts to speed up negotiations on the Trans-Pacific Partnership (TPP) agreement at a media briefing in Hanoi on October 22. Through meetings with ministries, departments and partners in Vietnam in the past two days, he said he felt the Vietnamese Government’s strong commitment to the early conclusion of negotiations with other participating countries. Froman was optimistic about the major multilateral trade pact, saying the participating countries are about to wrap up negotiations. The U.S. trade representative said one of the purposes of his two-day visit to Vietnam is to resolve differences between Vietnam and the U.S., including issues related to market access, intellectual property, State-owned enterprises and labor. Asked by the Daily about differences over organizing trade unions, one of the biggest problems for TPP negotiations, Froman said all participating countries should follow general labor standards of the International Labor Organization (ILO). He expected that the TPP agreement will help fuel strong economic and export growth for the country. Experts of the participating countries are currently in Australia for technical talks of TPP and ministers of those nations will attend a meeting in Sydney later this week. U.S. President Barrack Obama, Vietnamese State President Truong Tan Sang and leaders of others countries are expected to review the remaining issues related to TPP when they take part in the Asia-Pacific Economic Cooperation (APEC) meeting in mid-November this year. At their meeting in Hanoi on Tuesday, Deputy Prime Minister Vu Van Ninh and Froman shared that both countries are determined to conclude negotiations on the TPP agreement, Chinhphu.vn reports. Froman said he and Minister of Industry and Trade Vu Huy Hoang earlier worked together to resolve differences and forge consensus on certain issues. According to Ninh, there are many difficulties in the process of TPP talks but Vietnam is determined to finalize negotiations with the U.S. successfully. Ninh expected the U.S. as well as other countries participating in TPP talks should pay attention to the levels of development of each country and be flexible in negotiations. In addition, the U.S. should consider the core interests of Vietnam in sectors like textile, garment and footwear. Last month Ninh paid a visit to the U.S. and met several senior officials there, including Froman, Secretary of Commerce Penny Pritzker and Secretary of Treasury Jack Lew, to discuss TPP issues of mutual concern. During the visit, Ninh also had talks with the U.S. business community and called for companies stateside to support and create favorable conditions for the conclusion of TPP negotiations. Enterprises agreed that the U.S. should be more flexible in negotiations on Vietnamese goods, especially textile, garment and footwear. Slow SOE reform dents growth The International Monetary Fund (IMF) has said that Vietnam’s economy continues gradual improvement but the weak banking system and slow State-owned enterprises (SOEs) reform progress are still holding back economic growth. IMF said in a report obtained by the Daily yesterday that Vietnam’s growth is improving gradually and inflation has declined. Real gross domestic product (GDP) expanded by around 5.5% last year, underpinned by robust exports and foreign direct investment (FDI). However, domestic activity remained subdued despite supportive countercyclical policies, reflecting in part headwinds from a weakened banking sector and slow progress in SOEs reform. The unemployment rate remains low but underemployment exists, particularly in rural areas and economy-wide wage growth was flat. Besides, monetary conditions remain accommodative. With inflation on a downward trajectory and growth below potential, the State Bank of Vietnam (SBV) reduced policy rates by 50 basis points in early 2014. Overnight inter-bank rates have been well below policy rates due to ample liquidity and a decline in the domestic government bond benchmark yield curve. Sovereign spreads narrowed by about 100 basis points early this year, but gave back some of those gains following regional geopolitical tensions in May. IMF said bank loans to the private sector have been sluggish and profitability has weakened. Despite accommodative monetary conditions and strong deposit growth, private sector credit growth was 2.25% as of March, reflecting weak demand and ongoing adjustment due to weakened balance sheets. Looking to the future, IMF projected growth to continue its gradual recovery with subdued inflation. For 2014, real GDP growth is put at 5.5%, inflation around at 5.25%, the current account in surplus, and reserves at around 2.5 months of prospective goods and services imports. In the medium term, growth is projected at 6%, reflecting a cyclical recovery of the domestic economy, with inflation remaining in single digits. A rebound in imports would return the current account to a deficit. In addition, the current fiscal stance would result in the accumulation of public sector debt to around 60% of GDP, slightly below the National Assembly’s legal limit of 65%. Under this scenario, domestic risks are tilted to the downside. Slow progress in banking reform raises the economy’s vulnerability to adverse shocks and heightened distress, IMF commented. The economy is also vulnerable to spillovers from external shocks. In the short-term, surges in global financial market volatility, higher global interest rates, or protracted regional geopolitical tensions could undermine confidence, and reduce international reserves absent greater exchange rate flexibility. In the medium-term, a high degree of openness and reliance on FDI make the economy vulnerable to slower growth in major trading partners. Major expressway section to break ground in December Cuu Long Corporation for Investment Development and Project Management of Infrastructure (Cuu Long CIPM) is pressing on with a plan to start work on the Trung Luong-My Thuan expressway section on December 7, according to the Ministry of Transport. The corporation said it has drawn up a plan to select investors and will submit a list of qualified investors for the project to the ministry after consultant Transport Engineering Design Inc. (TEDI) finalizes an investment report on the project. Deputy Minister of Transport Nguyen Van The has urged the management board of public-private partnership (PPP) projects to collaborate with relevant agencies to set up appraisal teams for the project by the end of this month. The expressway section has total investment capital of over VND17 trillion. It will have four lanes in the first phase and will be widened to six lanes in the next phase. Earlier, the Bank for Investment and Development of Vietnam (BIDV) was chosen to implement the expressway project. However, the bank had to return the project to the ministry two years after it was unable to mobilize capital for the project. Then, Cuu Long CIPM was picked to replace the bank and completed site clearance in 2009. The Trung Luong-My Thuan is part of the HCMC-Can Tho expressway. The HCMC-Trung Luong section was opened to traffic in early 2010 and the other section is My Thuan-Can Tho. Once put into operation, the expressway will help reduce travelling time between HCMC and the Mekong Delta region. Machines for IC-making factory ready Machines for a multi-million-dollar integrated circuits (IC) plant in HCMC have been shipped to Cat Lai Port in District 2 and are scheduled for customs clearance in the next few days for installment at the facility at the Saigon Hi-Tech Park (SHTP) in District 9. Saigon Semiconductor Technology Inc (SSTI) imported the machines for the IC-making facility, which costs around US$286 million. A land lot has been allocated to the investor and construction is due to start this year, according to Duong Minh Tam, deputy head of the SHTP’s management board. Tam said SSTI has bought those machines from the owner of a chip factory in California, the United States. The first large-scaled IC-making factory in the country will turn out products using Radio Frequency Integrated Circuit (RFIC) technology. These chips are used to identify radio waves and manage goods, and will be exported to the U.S. In addition to the IC-making plant, the hi-tech park is home to a planned electronic chip plant invested by Saigon Industry Corp (CNS). The US$300-million project is part of the city’s ambitious program to develop a strong IC industry. The SHTP has set aside a land lot for the plant though it has not been licensed. HCM City to apply DBO format to wastewater plant The HCMC authorities have agreed to apply for the first time the design-build-operate (DBO) format to a wastewater treatment plant in the second phase of an environmental sanitation project in Nhieu Loc-Thi Nghe Canal basin. The project’s management board said as DBO format is the first of its kind to be implemented in Vietnam, the HCMC government has sought the Government’s approval for a special bidding mechanism to find contractors for the Nhieu Loc-Thi Nghe wastewater treatment plant. DBO was suggested by the World Bank which finances the project as this format has multiple advantages such as concentrated and sustainable operation conducted by an experienced firm, cost efficiency for the design, construction and operation of the project via a competitive bidding process, and effective wastewater treatment. In addition, this investment format is expected to help train manpower for the city’s wastewater treatment sector, simplified procedures for procurement and bidding and time saving as the consultant, contractors and operator are selected through only one bidding process. The second phase of the project is estimated to cost US$524 million, including US$450 million funded by the WB’s official development assistance (ODA) loan. This phase will be carried out in 2015-2019 to collect and treat wastewater in the Nhieu Loc-Thi Nghe Canal basin and District 2. The project will also help improve the environment for locals, restore and conserve the ecosystems of the Saigon River and the catchment area of the Dong Nai River, raise awareness of environmental protection, and boost the development of the city’s tourism and economy. The main components of the project are an 8-km sewer from the eastern bank of the Saigon River to the wastewater treatment plant located in District 2, construction of the plant with daily treatment capacity of 480,000 cubic meters, and a sewer network connecting to households in District 2. VinaCapital plans to split up infrastructure fund Fund manager VinaCapital has announced a plan to separate one of its investment funds, Vietnam Infrastructure Ltd. (VNI), into two – one open-end and one closed-end fund. According to a statement released on Tuesday, VinaCapital said VNI will be split into two parts. A portfolio of listed shares and bonds will be converted to shares. They will be returned to investors within the next 18 months as fund certificates of the open-end fund VCG Partners Vietnam Fund (VVF) established in Luxembourg. Meanwhile, VNI’s private investment portfolio as a closed-end fund is being traded on the AIM, the London Stock Exchange’s international market for smaller growing companies, within three years. The assets will be sold gradually in the future and the proceeds will be invested in VVF if investors do not withdraw their investment in cash. Explaining the plan, the enterprise said the fund has changed its investment form from traditional infrastructure to listed shares. Given the high ratio of listed assets in the total net asset value, the board of management has agreed on the separation as its initial investment tendency is not suitable anymore. Tony Hsun, managing director of VNI, said they will transfer listed shares in the portfolio into a new open-end fund. In fact, this is an ownership transfer from VNI to VVF. The fund will have to divest capital from some of existing assets following the Undertakings for Collective Investment in Transferable Securities (UCITS). The new fund VVF will focus on a wide investment strategy including medium to large-caps. The fund will eye various sectors aside from infrastructure stocks. To call for investments for the new fund, VinaCapital will launch some promotion and distribution channels to reach out to institutional and individual investors in Europe, Hong Kong, Singapore and Japan. The fund expects to realize a net asset value of US$250 million within the next 24 months, Hsun said. Regarding the participation of Vietnamese investors in the fund, Hsun said as VVF will be established in Luxembourg under UCITS regulations, investors in Europe and other international markets following the law can invest in VVF. VVF shares will only be traded by financial institutions outside Vietnam. For the closed-end fund, the fund manager has plans to finish capital divestment before June 2017. Earnings will be returned to investors by way of cash or fund certificates of VVF. An expert in fund management told the Daily that VinaCapital’s move aims to reduce the ineffectiveness of VNI in particular and closed-end funds in Vietnam in general. Since their establishment, most of the funds have yet to attract as many investors as expected. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR