BUSINESS IN BRIEF 1/12 Overseas remittances to hit US$12 billion in 2014 Banks predict that remittances from overseas Vietnamese will reach US$12 - 13 billion this year. Over the past three years, the country has seen a sharp increase in remittances, from US$9 billion in 2011 to US$11 billion in 2013. Head of the Ho Chi Minh City branch, State Bank of Vietnam, Nguyen Hoang Minh said Vietnam would remain in the list of  the world’s top 10 remittance recipients with US$12.1 billion, up about 10% compared to a year earlier. Similarly, the Bank for Investment and Development (BIDV)’s also forecast a 10% increase in overseas remittance to US$12 billion by the end of this year. Meanwhile, General Director of the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) Le Duc Tho expected the figure to hit US$13 billion in 2014. The rising remittances, together with strong inflows of direct foreign investment (FDI) and official development assistance (ODA) will make Vietnam’s balance of payments more optimistic, he noted. Tho also revealed that overseas remittances channeled through VietinBank mostly to Hanoi, Ho Chi Minh City and provinces having large numbers of people working abroad, accounted for 15-17% of the country’ total value. The Ho Chi Minh City People’s Committee also reported that overseas remittances to the city in the 11 months leading to December were estimated at US$4.4 billion. Shutdowns exceed 60,000 in 11 months Vietnamese businesses that have either been dissolved or have suspended operations in the first 11 months of 2014 numbered more than 60,000, a 9.8-per cent year-on-year increase. According to the General Statistics Office (GSO), a total of 8,661 enterprises completed dissolution procedures while 10,147 others registered for temporary suspension and 41,532 were either suspended while awaiting business codes or failed to register. The GSO figures indicate that the business community has been facing numerous difficulties, including competition pressure. The statistics office revealed that dissolved or suspended enterprises had been increasing in number since 2013 while enterprises in the black either retained the level of their operations or sought new opportunities. GSO figures also showed that from January to November, the number of new businesses in Viet Nam reached 67,790, a 4.5-per cent year-on-year decline, while the total registered capital of these new businesses reached VND391.3 trillion (US$18.6 billion), an 8.9-per cent year-on-year decline. The average registered capital of a newly established enterprise reached VND5.8 billion ($276,000), a 14-per cent year-on-year increase, while the total number of employees of these new businesses was estimated to be 992,000, a 1.9-per cent year-on-year increase. The GSO noted that in terms of capital, the number of new businesses established this year had increased year-on-year, suggesting that the country's business environment had improved and boosted the business community's confidence. The number of businesses that have resumed operations following a temporary shutdown numbered more than 14,200, an 11.8-per cent year-on-year increase that indicated economic recovery. The GSO proposed stronger Government support to help businesses overcome difficulties and achieve stable development. It also urged companies to strive to resolve their own shortcomings. Bilateral trade with Laos projected at $1.5b this yr Bilateral trade between Viet Nam and Laos is expected to reach US$1.5 billion this year, according to the Lao Consul General in HCM City. Speaking at a ceremony in HCM City yesterday to mark the 39th anniversary of the National Day of Laos (December 2), Southideth Phommalat said two-way trade was worth $995 million in the first nine months of the year compared to $733.5 million in the same period last year. Viet Nam is now the second largest investor in Laos with 423 projects worth a total investment capital of $5 billion, he said. Despite the economic difficulties in the past years, the Vietnamese Government has provided an increase of 10 per cent a year in official assistance development (ODA) to Laos, he said. Meanwhile, the country has granted scholarships for Laos students to study at Vietnamese universities, he said. Addressing the event, Phan Xuan Bien, chairman of the Viet Nam-Laos Friendship Association in HCM City, reviewed the outcomes of ties between the two Parties, States and peoples, as well as the cooperation between HCM City and Laos over the years. He emphasised that cooperation had been successful in a wide range of fields from trade, industry and agriculture to healthcare, education and human resources training. Over the past, the friendship, solidarity and comprehensive cooperation shared by both countries had developed in all areas, he said. More opportunities to boost exports to Mexico Mexican multinational group Home Depot wants to import 18 types of products from Vietnam, including construction materials, home appliances, wooden furniture, electrical tools, umbrellas, and so on. According to the Vietnamese Trade Office in Mexico, a trade workshop will be held in Mexico City on December 15, where Home Depot will seek business opportunities with Vietnamese partners in the fields. Vietnamese firms who want to be suppliers of Home Depot can contact at “The Home Depot México S. de R.L. de C.V. Ricardo Margáin Zozaya 555, Edificio A Parque Corporativo Santa Engracia, San Pedro Garza García, Nuevo León, C.P 66267 Mexico”. Currently, Home Depot runs 2,200 shops in the US, Canada and Mexico, which can import around 40,000 products. Last year, its revenue hit US$71.3 billion. The Ministry of Industry and Trade reported that in recent times, Vietnam has exported some products to Mexico, including garment, computers, electronics and components, seafood and coffee. Two-way trade turnover between the two countries in 9 months ending September rose by 45% to US$986 million compared to the same period last year. Imports from Hungary jump high In the first 10 months of this year, Vietnam’s imports from Hungary rocketed 42.2% to US$96.5 million while exports to the market dropped 12.2% to nearly US$45.5 million compared to the same period last year. According to Vietnam Customs’ statistics the country’s total imports and exports in the review period increased by 18.6% to US$141.8 million. In general, Vietnam always runs a trade deficit with Hungary, especially in 2010 and 2011. In the 10-month period of 2014 Vietnam’s import surplus with this market reached nearly US$51.1 million, triple the figure reported a year earlier of US$16.1 million. The total value of Vietnam imports and exports with Hungary made up a small proportion (nearly 0.06%) of the country’s total trade turnover. In the review period, Hungary is Vietnam’s 80th export market in terms of value and the country’s 52nd goods supplier. Vietnam mainly exports to Hungary garment, means of transport, spare parts, telephone handsets and components while imports pharmaceutical products, machines, equipment, and tools. Vietinbank projects overseas remittances to reach over $12b Viet Nam's overseas remittances in 2014 are expected to reach US$12.1 billion, making the country one of the top 10 overseas remittance recipents. Viet Nam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) announced the information at its conference on investors and specialists here last Tuesday. Vietinbank predicted that the country's gross domestic product this year would reach 5.8 to 5.9 per cent while the consumer price index would remain under control at 3.5 per cent. The momentum of foreign direct investment inflows will also continue for the economy in the future. Viet Nam's imports for the entire year were predicted to cost $145 billion while exports were predicted to earn $146.5 billion to $148 billion, thereby increasing the country's trade surplus to $1.5 billion. In addition, the bank predicted overseas remittances to be stable with a 10-per cent growth rate this year. The State Bank of Viet Nam will retain the foreign exchange rate, and the country's supply of foreign reserves will remain sufficient. Vietinbank also predicted that the banking sector would face difficulties in meeting their business targets in the year-end months and next year. Interest rates will be slightly reduced to support enterprises' production while banks' liquidity will rise because the mobilising rate will be higher than the lending rate. The Government bond market is expected to develop because of low interest rates and high transaction amounts. Regarding bad debts, the bank believed the situation would not improve sharply, especially for restructured debts. It added that current solutions to solve bad debts were not effective, and the issue would be a key concern for banks in the future. Fisheries urged to cut seed dependence Viet Nam should reduce its dependence on fish seed imports to increase its seafood export profits in the future, said Deputy Minister of Agricultural and Rural Development Vu Van Tam. According to the Directorate of Fisheries, nearly all fish seeds except tra and basa fish have to be imported from other countries or exploited in their natural environments. The seeds come from tiger and white-leg shrimp, as well as lobster, eel, tilapia and sturgeon. Of these, Viet Nam has imported 20 per cent of demand for parents of tiger shrimp seeds and 100 per cent of demand for parents of white-leg shrimp seeds. Farmers have found white-leg shrimp to be quite lucrative. The domestic fisheries sector needs 180,000 white-leg shrimp parents to meet domestic demand for 100 billion seeds. To meet such a demand, they need to import all parents from the United States, Singapore, Indonesia and Thailand. Tam noted that import dependence had relegated enterprises and farmers to a passive role in seed production and had resulted in exports that were priced high to cover import costs. To address this concern, the ministry and aquaculture research institutes had been implementing domestic shrimp seed production projects since 2013 to develop domestic sources and reduce import dependence, Tam said. If the sector could produce seeds at home, the price of seeds could go lower than that of imports, thereby increasing farmers' profits and placing shrimp disease under control, said Pham Anh Tuan, deputy director general of the Directorate of Fisheries. The ministry expects Vietnamese seafood export profits to reach US$7.3 billion to $7.5 billion for the entire year, or more than $6.7 billion in 2013. Of this, shrimp export profits could make up $3.6 billion or more than the $3.1 billion achieved in 2013. Trademarks needed to boost domestic specialities Viet Nam's diverse domestic specialities could bring in high value, but enterprises that manufacture them have yet to learn how to develop trademarks and create distribution channels for their products. Tran Thi Phuong Lan, the Ha Noi Department of Trade and Industry's deputy director, made this observation at a conference here last Saturday. The conference, which the Ha Noi Department of Trade and Industry organised, aimed to support enterprises in enhancing the value and developing the trademarks of their products to make Viet Nam's integration into the world economy easier. Numerous experts in trademark development and protection were invited to help enterprises further understand how to build, develop and protect trademarks for success in business. Even though some enterprises were successful in developing trademarks in and outside the country for their high-value specialities, a number of them have yet to learn how to develop the trademarks for export. To enter large distributing channels, the enterprises need to meet international distributors' standards on design, quality and packaging. To build sustainable trademarks in domestic and international markets, many successful enterprises in the world began their respective businesses in small shops, revealed Nguyen Huyen Minh, lecturer of the Foreign Trade University (FTU). Since they focused on quality, they built a trademark that later became popular in the world. Minh said. He added that to be successful, enterprises must also put themselves in the shoes of their consumers. "Many producers take it for granted that buyers must know how to use their products. But in fact, many buyers do not know how to use or cook local specialities in the right way," Minh noted. He suggested that businesses provide detailed information about the origins and procedures on the making and use of their products. He also stressed the importance of the domestic market in the enterprises' trademark development strategy. "Domestic specialities should win over domestic consumers because the domestic market is crucial in the sustainable development of speciality manufacturers and serves as a safety zone if they face difficulties in foreign markets," Minh said. Trademark protection regis-tration and intellectual property was also discussed and recommended during the conference, especially for enterprises that plan to export their products. Tran Tam, an intellectual property lawyer, said that understanding legal requirements of trademark protection would help enterprises defend themselves against trademark infringement or copying and protect the trademark's prestige. Le Ba Ngoc, deputy chairman of the Viet Nam Handicraft Exporters Association (Vietcraft), advised enterprises to formulate detailed and long-term plans, raise village producers' awareness of the need for specialities development, improve quality, invest in packaging and focus on training quality workers for sustainable trademark development nationwide and worldwide. The programme to promote regional specialities here is open from November 28 to December 2.   HCM City spreads Tet commerce Nearly 40 producers of Vietnamese high-quality goods and local specialties introduced their products and services for the Tet (Lunar New Year) holiday under a "Tung Hang Tet" (Spreading Tet Goods) programme organised in HCM City's Van Thanh Park late last week. The one-day programme attracted about 1,000 participants, including small traders at 45 traditional markets, distributors and purchasing staff at supermarkets. Most of the producers are active in the food, cosmetics, fashion, beverage, confectionery, gift services and others. The aim of the event was to promote domestic brands and help local firms cope with tough economic times, and at the same time introduce customers to locally made, high-quality products at reasonable prices. It also provided an opportunity for local producers and distributors to exchange information to boost sales at a time of low consumption, said Vu Kim Hanh, chairwoman of the Business Association of High Quality Vietnamese Goods. It was organised by the association and the Business Studies and Assistance Centre. Electronics, appliance sales surge to 1.3 billion USD Vietnamese consumers spending on electronic products and appliances reached 28 trillion VND (1.3 billion USD), a 20.9 percent increase, in the third quarter of 2014. Most of the products purchased were mobile phones and earphones, which brought in sales of more than 12 trillion VND (561 million USD), a 28 percent year on year rise. Information and technology (IT) products ranked second with total sales of 5.6 trillion VND (262 million USD). Significant growth was also seen in total sales of three major domestic appliances: refrigerators at 15.6 percent, washing machines at 15.5percent and microwave ovens at 12.8 percent. However, sales of laptop computers declined, even as sales of tablet devices doubled with the exception of the Apple iPad and iPad mini, which ironically experienced a sales decline in the world market following the release of Apple’s iPhone 6. GFK, one of the world’s largest research companies, predicted Vietnam’s technology and electronics market to continue growing in the last quarter of the year. The company predicted bestselling products to include the LED TV, smart phones and tablet devices, as producers and retailers are expected to offer promotional and sales programmes for these products during the year-end months to stimulate consumer spending. Sales of washing machines, refrigerators and laptops are likewise expected to grow but at a low rate. Vietnamese firms seek paths to EU market Vietnamese businesses have been provided with necessary information on opportunities to make inroads into the European Union (EU) market through Belgium’s Wallonie region, at a recent workshop in Ho Chi Minh City. Jointly organised by the Ministry of Industry and Trade’s Department of Trade Promotion and the Wallonie region’s Trade and Investment Promotion Agency, the November 28 event aims at boosting stronger Vietnam-EU trade ties. Addressing the event, Vo Ta Luong, Deputy Director of the ministry’s Department of Trade Promotion for Southern region said Vietnam and EU have set up a comprehensive cooperation in all fields, including trade, investment, judiciary cooperation, security, and the climate change. The two sides are close to the signing of an EU-Vietnam Free Trade Agreement (EVFTA), which is expected to bring benefits as well as challenges to Vietnam’s key sectors, Luong said, the According to Jean Claude Marcourt, Vice President of the Wallonie Government stated Belgium and the Wallonie region in particular always welcome foreign investors. With its potential along with advantages of geography and infrastructure, Belgium is one of the six most attractive destinations for foreign investors in Europe. Through Belgian market, especially the Wallonie region, foreign investors will have opportunities to access 65 percent of European markets, Marcourt noted. The EU is Vietnam’s leading economic and trade partner. In the recent years, two-way trade between the two sides increased by 15-20 percent annually. Belgium is among Vietnam’s most important trade partners in the EU with two-way trade in 2013 hitting 1,825 million USD, up 17 percent over a year earlier. In the first ten months of this year, Vietnam’s export turnover to Belgium gained 1,489 million USD. Business role in promoting national competitiveness discussed Vietnamese officials and entrepreneurs as well as top experts from the World Economic Forum (WEF) shared opinions on ways to promote the role of enterprises in enhancing national competitiveness in the context of increasing regional and international integration during a conference in Hanoi on November 28. According to Deputy Foreign Minister Bui Thanh Son, the Vietnamese Government always defines the improvement of business environment and competitiveness as a key task in the country’s socio-economic development strategy. Along with renovating the growth model and restructuring the economy, Vietnam has rolled out strong measures to better its business climate and competitiveness, he added. Thanks to its reform efforts, Vietnam has become a middle-income country with its dynamic economic development, making it an attractive investment destination in the region, he stated. WEF Managing Director Philipp Roesler said Vietnam’s largest advantage is a young workforce. Therefore, promoting the education and training development and equipping knowledge and skills in combination with market and business demands are the best ways to improve the competitiveness. He also emphasised the need to better fiscal policy, invest more in infrastructure, connect rural areas and economic hubs, and develop information technology. Director of the Vietnam Chamber of Commerce and Industry Vu Tien Loc stated that competitiveness plays an important role in the current regional and international integration, especially when the country joins the ASEAN Community and signs free trade agreements with many countries and the Trans-Pacific Partnership (TPP) Agreement. Participants at the event also discussed factors affecting the competitiveness of enterprises and their contributions to the national competitiveness. Enterprises join international handicraft fair in Italy Fifty Vietnamese enterprises are taking part in the 19th international exhibition on fine art and craft products (AF-L’ARTIGIANO), which kicked off in Milan, Italy on November 29. Vietnamese Ambassador to Italy Nguyen Hoang Long attended the opening ceremony of the exhibition, which first began in 1996 and now is the largest international event dedicated to the handicraft industry. The diplomat lauded the Vietnamese businesses’ participation as it allows them to reach customers far and wide and learn experience in production and brand improvement from foreign partners. The display of hand-made products on an area of nearly 1,000m2 together with the performances of traditional long dress (Ao Dai) and lion dances help feature a beautiful, hospitable, and peaceful Vietnam to visitors, the ambassador said. The businesses’ trip was co-organised by the Vietnam Cooperatives Alliance, the Vietnamese Embassy in Italy, the Ge.Fi group and the Lombardy region. This year’s event will run until December 8. Leather, footwear sector needs more domestic materials Increasing the localisation ratio of leather and footwear products is a priority requirement for the industry in international integration as materials account for 68-75 percent of footwear production costs, the Vietnam Business Forum Magazine (VBF) said. According to the magazine, the localisation ratio is now only 40-45 percent, while key materials like leather, artificial leather and canvas are mostly imported. As of early 2014, the country had 129 material producers, including tanners. The industrial production value of the leather and footwear material sector expanded 16.5 percent a year in the 2006-2011 period. The proportion of material value to overall leather and footwear production value was only 20.3 percent in 2011. This growth was lower than the rate recorded by supporting industries of other industries like garment-textile, electronics and mechanics, and was not commensurate with the development potential of supporting industries in Vietnam. The Vietnam Leather, Footwear and Handbag Association (Lefaso) admitted that the added value of leather, footwear and handbags of Vietnam is still low. In 2013, Vietnam’s leather footwear and handbag export turnover reached 10.3 billion USD, of which materials account for 70 percent, or 7 billion USD. Particularly, imports accounted for 60 percent, or 4.2 billion USD, and domestic sources contributed 40 percent, or 2.8 billion USD. In addition, Vietnam’s leather and footwear industry is mainly doing outsourcing for foreign companies which assign materials and product designs. A few input materials are just beginning to be manufactured in Vietnam, like leatherette, non-woven fabrics, technical fabrics, soles, accessories, adhesives and chemicals. Vietnam is now supplying below 20 percent of these materials. Moreover, according to Lefaso, if material output is not invested for expansion after 2013, Vietnam will have to import 75 percent of leather in 2015 and 87 percent in 2025; 96 percent of leatherette in 2015 and 99 percent in 2025; 92 percent of woven and non-woven fabrics in 2015 and 94 percent in 2025. Currently, Vietnam’s leather, footwear and handbag supporting industries are treated equally with other supporting industries, including incentives for trade promotion, investment credit support, export credit support, export contract execution guarantee. However, to reduce dependency and have input sources, this industry needs more specific support. In the long run, Vietnam needs to develop and implement consistent mechanisms, policies and measures to attract investment capital from large-scale multinational corporations engaged in leather and footwear production. In addition, financial support, equipment and technology advice are also needed for domestic support enterprises to meet the requirements of FDI firms and increase localisation rates. In 2014, Vietnam's leather and footwear industry targets to earn 12 billion USD from exports, up 16.5 percent over 2013, including 9.5 billion USD from footwear, up 13 percent, and 2.5 billion USD from handbags, up 31 percent. To achieve this goal, Vietnam should also take advantage of free trade agreements (FTAs) and the Trans-Pacific Partnership (TPP) agreement. These are considered to be a driving force and a golden opportunity for the leather and footwear industry to develop both quantity and quality. Local company hands over platform topsides to Indian customer The PetroVietnam Technical Services Corporation launched and handed over the upper infrastructure of the HRD process platform to the Indian oil and gas company, ONGC, on November 29. This is the biggest project in the field of building drilling platforms that has been undertaken by a Vietnamese company so far. Speaking at the event, Deputy Prime Minister Hoang Trung Hai said the project proves the skills of the PTSC staff, paving the way for them to winning more customers in the field. The PTSC won the contract to build the 11,000 tonne structure in April last year. More Vietnamese guest workers come to Japan The number of Vietnamese guest workers going to Japan has increased sharply in recent years as supply from China, the main provider for long, has dried up. Statistics from the Vietnam Association of Manpower Supply show that as of October more than 16,280 workers had gone to Japan this year, the first time ever the number has exceeded 15,000. Fifty labour companies have sent at least 200 workers there. Nguoi Lao Dong (Labourer) newspaper quoted Nhat Hy Khang Company as saying labour supply to Japan is booming and it expects to hire 300 workers in all this year. Tracimexco, a company also sending Vietnamese workers to Japan, which has sent 200 people to the country, plans to send totally 300 workers to the country till the end of this year, according to the paper. Vu Thanh, director of Tracimexco, told the newspaper: "We have permanent recruitment cooperation with more than 20 associations and trade unions in Japan. Each month we sign 10 contracts. In order to meet the demand, we have to [hire] 200-300 workers [this year]." But Esuhai Limited Company is the leader after obtaining contracts for 700 workers of whom 400 have left for Japan. Le Long Son, the company's general director, told the newspaper that 500 is achievable this year. Esuhai has ties with 50 Japanese small-and-medium-sized enterprises that supply manpower to 300 factories in Japan. Until 2012 China supplied 80 percent of Japan's labour needs, sending 60,000 workers each year. Vietnam used to account for around 10 percent. But since last year the number of Chinese workers going to Japan has been falling dramatically, forcing Japan to look to countries like Vietnam, Indonesia, and the Philippines. With Japan speeding up construction for the 2020 Olympics, is demand for Vietnamese construction workers has shot up in recent months. In the last quarter of this year an expected 1,700 Vietnamese workers will go to Japan every month, taking the total for the year to 21,000. Hai Phong remains among top FDI attractive destinations Hai Phong city remained one of the most attractive destinations for foreign investors with 406 valid projects valued at 9,887 million USD so far, according to a city senior official. The city attracted investors from 25 countries and territories, with most projects focusing on industry and high technology, said Vice Chairman of the municipal People’s Committee Dan Duc Hiep. Notably, the city was the choice of some world giants, including Bridgestone with a 447.8 million USD factory launched in October, as well as Nipro, Pharma, Fuji Xerox, and LG Electronics, he noted. Currently, Hai Phong has 19 industrial parks covering 9,716 hectares, including Nomura-Hai Phong, Dinh Vu, VSIP Thuy Nguyen, Cat Hai and Lach Huyen, said Hiep. However, he also pointed to a number of shortcomings that can hinder the FDI inflow into the city, including a lack of professional investment promotion campaigns, and slow implementation of projects and ground clearance, along with poor infrastructure system and a short of skilled workforce. In the future, the city will focus on designing policies to support and encourage investors, while working with domestic and foreign partners in speeding up ground clearance and building infrastructure, focusing on industrial parks for support industry, he said. The official also stressed the need to step up international economic cooperation and expand the city’s economic space, along with broadening relations with strategic partners, including Japan, the Republic of Korea, Russia, the US, the EU and other regional countries, international organisations and multi-national groups. Project helps VN re-brand rice Viet Nam and the International Rice Research Institute (IRRI) will implement a US$30 million, five-year project starting in 2015 to improve the image and quality of Vietnamese rice. The quality of Vietnamese rice was lower than that of neighbouring countries such as Thailand and growers remained poor, IRRI director general Robert Zeigler said at a conference this week with Viet Nam's Ministry of Agriculture and Rural Development. Under the project, IRRI will help Viet Nam implement a marketing strategy that can overcome the country's image as a supplier of low-quality rice, according to IRRI consultant Lourdes Adriano. The institute will also provide technical support to reduce pre and post-harvest losses and develop measures to enhance Viet Nam's leadership in food security and capacity to adapt to climate change. Deputy agriculture minister Le Quoc Doanh noted that the agricultural sector faced huge challenges, as its contribution to GDP dropped from 20 per cent in 2010 to 19 per cent in 2013, but was optimistic that IRRI's expertise in researching and developing sustainable rice varieties would help farmers gain better income. A representative from An Giang Province Department of Agriculture and Rural Development expressed the need for IRRI to support staff at the local level when it came to choosing suitable rice varieties. MARD and IRRI will form a steering committee to oversee the programme. MARD will select the members of the committee, which will be chaired by the MARD. Viet Nam and IRRI have worked together since 1963. Policies to blame for low productivity Viet Nam's productivity was one of the lowest in the 10 ASEAN nations, said Nguyen Ba Ngoc, deputy director of the Institute of Labour Science and Social Affairs at a forum for Labour productivity on Thursday. Ngoc said this indicated that the Government needed to improve its policies. He said there were nearly 54 million labourers in 2013, and only 18.4 per cent of them were well educated and trained, an increase of one per cent over 2007. Ngoc said that Vietnamese workers lacked necessary skills, including creativity, teamwork, and leadership, and seemed unable to acquire new technologies. This often led to low-quality work. In addition, many employees were not working in the fields they were trained for and therefore could not perform well, the deputy director said. Experts said other causes for low productivity included the Government giving advantage to low-productivity State-owned enterprises for investments and resources. Le Dang Doanh, former director of Central Institute for Economic Management (CIEM) said that Vietnamese companies considered they did not have to improve their technologies and labour quality. This was because their business depended on the relationship with management agencies which they could bribe to receive economic advantages. He said that Vietnamese companies must change their business model to sustainable growth and invest in technology development, the Government should increase its efforts to fight corruption and revise education and training system to provide more skilful labourers for the market. Pham Chi Lan, an economic expert, said labourers were not the only ones to blame for low productivity. She said the Government should move some of its resources from the public sector to the private sector which had higher working productivity, invest in the fields with economic competitive advantages, and remove the barriers which prevented the labour force from moving among economic sectors and among geographic areas. Nguyen Dinh Cung, CIEM director, said society should support new inventions and initiatives, which would motivate enterprises. He also said that the Government should remove the current minimum wage and let the market decide the labour wage because companies often paid their workers the minimum wage, limiting their enthusiasm. Policy support can boost private sector role in agriculture Stable policies, together with incentives in land and credits, would encourage the private sector to invest in agricultural and rural development, experts said at a workshop yesterday co-organised by the Embassy of Denmark and the Central Institute for Economic Management (CIEM). The private sector was hesitant to invest in the agricultural sector due to worries about working with farmers who were ill equipped to cope with bad weather and diseases, deputy director of the Institute of Policy and Strategy for Agriculture and Rural Development Nguyen Do Anh Tuan told workshop participants. Slow capital recovery in comparison with other sectors was another deterrent. CIEM's vice president Nguyen Thi Tue Anh said that small and medium-sized enterprises (SMEs) changed the employment structure in rural areas. Anh cited a study that found that the number of rural residents employed in the agro-forestry-fishery sector declined from 79.6 per cent in 2011 to 59.6 per cent today, while the number working in industrial production and services increased from 7.4 per cent to 18.4 per cent. However, declining productivity was a major issue due to the large number of SMEs creating primarily low-productivity jobs, Anh said. With outdated technology, declining investment, intense competition and cheap imports, SMEs would also find it hard to maintain growth. Denmark's support During the 2011-14 period, Denmark's support to the private sector under the Global Competitiveness Facility for Vietnamese enterprises created about 30,000 jobs and generated significant export income, workshop participants heard. The US$11 million programme provided grants for 42 projects in eight provinces with a focus on increasing the competitiveness of Vietnamese exports through supporting innovations and initiatives to develop commercially viable business services for SMEs, household enterprises and farmers. The Danish programme's grantees also shared experience at the workshop, besides an exhibition showcasing products and initiatives from the programme's supported projects. During 2014-15, Denmark will disburse up to $90 million in official development assistance to Viet Nam. Danish support to Viet Nam focuses on green growth, climate, private sector development, water and sanitation, culture and governance activities. Workshops on support industry development held in Japan A series of workshops on investment cooperation to develop Vietnam’s support industry and introduction of the South Hanoi supporting park has been held in Fukuoka, Osaka and Kyoto, Japan. Speaking at the events in Osaka and Kyoto, Consul General in Osaka Tran Duc Binh affirmed that Vietnam-Japan relations have been developing strongly in all fields, from politics, security, economy, trade, and scientific research to people-to-people exchange, laying a firm foundation for Japanese investors to operate in Vietnam. Kansai central region comprising of Osaka, Kyoto and Kobe accounts for 30 percent of Japan’s investments in Vietnam and one-fourth of the total number of its projects in the Southeast Asian country. In the first eight months of this year, two-way trade turnover between Kansai and Vietnam hit 4.5 billion USD. Vietnam is accelerating its economic restructuring and renovating growth model towards becoming an industrialised country by 2020. This opens up more opportunities for Japanese investors to Vietnam, Binh said. For his part, Consul General in Fukuoka Bui Quoc Thanh said there is huge potential of cooperation between Vietnam and Japan, particularly between Japan’s southern region of Kyushu and Okinawa and Vietnam’s localities, in the fields of electronics, machinery, agriculture, agro-fisheries processing, shipbuilding, environment and energy efficiency. This event is an initial step for cooperation between Kyushu and Vietnamese businesses in the support industry, Thanh said. Meanwhile, Chairman of the Hanoi Supporting Industry Business Association (HANSIBA) Nguyen Hoang said Vietnamese firms want to cooperate with Japanese partners in supporting industries to meet the increasing demands of Japan’s leading groups, such as Toyota, Honda and Sony and access Japan’s global production chain, Hoang said. He also introduced participants to the Hanoi South Supporting Industrial Park and Vietnam’s incentive policies. Quang Ngai’s Dung Quat economic zone attracts investment flows The Dung Quat Economic Zone (DEZ) with the 3 billion-USD Dung Quat Refinery as its heart can be said to be the driving force of economic development in the central province of Quang Ngai. The DEZ has also attracted several large-scale projects, thus becoming one of the central region’s most attractive investment destinations, contributing to economic development in the locality and the region at large. The first 10 months of this year saw 10 projects granted licences to operate in the Zone with a combined capital of over 1 trillion VND (47 million USD), a ccording to Le Minh Huan, Chairman of the provincial People’s Committee. Three of these projects are invested by foreign investors. Three other projects worth over 4,000 trillion VND (188 million USD) are expected to be granted licences in the remaining months of the year, Huan added. After 18 years of development, the zone has attracted 120 projects with a total registered capital of 8.5 billion USD and disbursed capital worth 4.85 billion USD. In 2013-2014, the Zone’s management board enhanced its investment promotion efforts, both domestically and abroad, by participating in workshops to introduce the park to leaders in the support industries and agricultural sector in Japan and the Republic of Korea (RoK). At the same time, many delegations from the Japan External Trade Organisation (JETRO), and businesses from Japan, the RoK, the US and Singapore, along with other international and domestic firms, undertook fact-finding tours to the province to seek investment opportunities in the DEZ as well as in other local industrial parks. Yasuzumi Hirotaka, CEO of JETRO said following his tour that Quang Ngai is one of the most popular destinations for Japanese firms to invest in, and his agency would serve as a bridge to introduce the locality’s potential to more Japanese investors. There have been positive signals in attracting investment into the DEZ in recent times, as a number of international businesses have affirmed their intention to deploy large-scale projects in the zone in many fields, especially thermo-electric power generation, gas-power, and wood-pulp. Japan’s Sojitz Group is planning to team up with India’s JK Group to build a wood-pulp plant in the DEZ with a capacity of 150,000 tonnes per year. At the same time, preparations are under way for two key projects worth approximately 4 billion USD, which are the Dung Quat Thermal Power Plant (2.2 billion USD) and the expansion of the Dung Quat Oil Refinery (1.8-2 billion USD). Deputy Prime Minister Hoang Trung Hai has assigned the Vietnam Oil and Gas Group (PetroVietnam) to complete studies on upgrading and expanding the Dung Quat Oil Refinery, to be submitted to the Ministry of Industry and Trade before November 15 for verification. Meanwhile, the Ministry of Industry and Trade was assigned to work with relevant ministries and sectors, as well as the Quang Ngai provincial People’s Committee to verify the project, and report to the Prime Minister in November. PetroVietnam said the plant’s production capacity would be increased to 9-10 million tonnes/year from the current 6.5 million tonnes. The expansion will start in 2017 and it is expected to be fulfilled after 60-78 months of construction. Meanwhile, the Dung Quat thermal power plant will be financed by Sembcorp Corporation of Singapore. The Prime Minister has agreed to include the plant in the national power master plan VII. The 1,200MW plant will be built in the form of Build-Operate-Transfer (BOT) on 134ha of land in Binh Dong commune, Binh Son district, with its construction scheduled to begin in 2016. Its first turbine will be operated commercially from September 2020 onwards, while the entire plant will become fully operational in March 2021, generating 7 billion kWh of electricity every year. The DEZ’s management board is building resettlement areas for some 2,160 households, the largest number of households to be relocated in the zone so far. The VSIP Quang Ngai Industrial-Urban-Service Complex, invested by the Vietnam-Singapore Joint Venture Co. Ltd, is set to become a new magnet for light industry and service projects to the DEZ in the near future. By the beginning of November, the complex attracted nine FDI projects and a domestic project with a total funding of 164.3 million USD. Three projects are expected to be completed or become operational by the end of this year, and three others are due for completion in 2015. These six projects are set to employ 8,000 people. The DEZ is working to expand its southern section with the formation of the Dung Quat Heavy Industrial Zone 2 and the Dung Quat deep-water Seaport 2. According to a plan publicised in September 2013, the Zone 2 will cover nearly 2,820ha, bordering the Dung Quat Seaport 2 in the northeast, the Van Tuong new urban area in the northwest, Sa Ky city in the southeast, and Binh Tan and Tinh Hoa communes in the southwest. It will focus on oil refinery, chemical industry, manufacturing, shipbuilding, steel, thermal electricity, and support industries, to be served by the deep seaport. Meanwhile, under the Ministry of Transport’s detailed plan for 2030, the Dung Quat Seaport 2 will comprise 1,850ha of land and water. The port will be able to cater for ships with tonnages of over 300,000 tonnes, and handle 37 million tonnes of cargo per year by 2025 and 100 million tonnes by 2030. Additionally, Quang Ngai province is also working hard to perfect its traffic infrastructure, such as the second phase of Vo Van Kiet road, the routes connecting Tri Binh and Dung Quat port, and Dung Quat 1 and Dung Quat 2 zones. At the end of November 2013, the provincial People’s Committee issued a decision stipulating policies to support investments in certain activities. The support includes the construction of resettlement areas, technical infrastructure and labour training for projects on social housing, education, vocational training, health, culture, sport the environment and tourism, investment projects in industrial parks and the DEZ as well as projects in the province’s list of priority investment. Maximum support for a project is 20 billion VND. Additionally, investors will receive financial assistance in order to hold three-to-six-month training courses for their new labourers. Currently, local authorities are offering a range of tax incentives according to the Government’s regulations for investors, including a preferential corporate income tax rate of 10 percent for the first 15 years since the start of production; a four-year tax exemption after earning taxable income; and a 50 percent tax cut for the next nine years. Large-scale projects must be approved by the Prime Minister in order to enjoy a preferential tax rate of 10 percent over the course of 30 years; tax exemptions for fixed asset imports, and tax exemptions for imported production materials over 5 years since the start of production; and a 50 percent tax reduction for personal income tax. Local authorities also adopted policies to support land clearance compensation and labour training in a bid to encourage investments in the Dung Quat economic zone. This year, the DEZ generated nearly 130 trillion VND (6.19 billion USD) in industrial production and commercial services value, despite the Dung Quat refinery having to halt operations for two months of maintenance. The provincial industrial production value was estimated at 20.6 trillion VND, exceeding the annual target by 6.7 percent. Export turnover stood at 650 million USD, up by 27.8 percent, and imports stood at 760 million USD, down by 34 percent year-on-year. The province contributed nearly 28.1 trillion VND to the State budget, with 26 trillion VND generated by the DEZ. The provincial economy is forecast to continue to thrive in 2015 due to the stable operations of the Dung Quat oil refinery plant and the commencement of investment projects in the VSIP. Gross domestic product (GDP) per capita is expected to reach 2,546 USD per year, while the production value of industry and construction would rise by 11-12 percent, services by 12-13 percent, and agriculture-forestry-fishery by 2-3 percent. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR