BUSINESS IN BRIEF 17/12 Air ticket prices unchanged by fuel cost cuts Declining oil prices over the past month have yet to be reflected in lower ticket prices among airlines operating in Vietnam. A representative from Vietnam Airlines said that declining fuel costs, which account for some 38 percent of the airline's overall costs, will boost the operator's efficiency and may allow the airline to lower its fuel surcharge. But there were no plans to reduce the surcharge at this stage as it was unclear whether lower oil prices were only a temporary market phenomenon. “Vietnam Airlines" fuel surcharges are based on the average level of the local aviation market. However, we do not collect this surcharge on domestic routes,” he noted. A spokesman for Jestar Pacific said lower fuel costs would be good for airlines, but would not necessarily mean lower ticket prices unless cheaper fuel became a long-term feature. Airlines are already offering discount tickets, which did not allow much room for any overall lower of ticket prices. Other costs, such as maintenance and landing fees, were continuing to rise. Current falls in fuel prices would take time to work through the system as many airlines hedged prices at high levels when fuel was rising. The price of Brent crude has dropped 40 percent since June and the Organisation of Petroleum Exporting Countries (OPEC) has decided not to restrict supply in order to force oil higher. The International Air Transport Association (IATA) expects the decline in oil prices to translate into savings by airlines of USD12 billion in fuel costs. Vingroup starts work on hotel, office project Vingroup has begun work on Landmark81 – an 81-storey hotel, office and shopping property – in Vinhomes Central Park in Binh Thanh District, HCMC. The project, which is scheduled for completion by the end of 2017, has total floor space of 141,000 square meters and comprises restaurants, bars and a sky-deck observatory besides serviced and commercial apartments, hotel rooms, offices for lease and shopping facilities. The five-star-plus hotel Vinpearl has some 450 rooms.  There will be 900 apartments and serviced apartments. Restaurants and the Sky bars will be located on the 66th and 67th floors, while the observation deck will be on the 79th floor. The 59,000-square-meter shopping mall Vincom Center will be situated at the foot of the building. The Landmark81 will become the tallest in Vietnam when it is put into use. At present, the 72-storey Keangnam building in Hanoi is the tallest in the country, followed by the 68-storey Bitexco Financial Tower in HCMC. In July, Vingroup broke ground for a multi-functional urban complex Vinhomes Tan Cang at a total cost of VND30 trillion on an area of 43 hectares in the Saigon Newport site in Binh Thanh District. Experts: Long Thanh airport’s economic efficiency should be clarified Economic and aviation experts have called on the Transport Ministry and Airports Corporation of Vietnam (ACV) to elaborate on the economic efficiency of the Long Thanh airport project before submitting it to the National Assembly (NA). The NA Standing Committee held a meeting in HCMC last week to collect comments from economic and aviation experts on the multi-billion-dollar airport project to be developed in Long Thanh District in the southern province of Dong Nai. Speaking to reporters on the sidelines of the meeting, architect Ngo Viet Nam Son, who has worked on some airport projects in foreign countries, said important facts and figures about the airport project are not sufficient for the legislative body to make a decision. Economic efficiency of the project is what Son is most concerned about. He questioned when the investor of the project would be able to recover investment capital and earn profit and whether the project would contribute to or erode the country’s gross domestic product (GDP) growth. Le Trong Sanh, former chief of flight management at Tan Son Nhat International Airport in HCMC, reaffirmed his support for expansion of Tan Son Nhat, instead of building Long Thanh airport. He also requested the NA not to earmark capital from Government bond sales planned for 2016-2020 for the new airport as there are many other major infrastructure projects in dire need of funding. Experts said the Ministry of Transport’s proposal to use official development assistance (ODA) loans to lend to ACV like what has been done for Terminal 2 (T2) construction at Noi Bai International Airport in Hanoi City is not convincing without an analysis of economic efficiency of the Long Thanh airport project. They noted that ACV has borrowed only US$1 billion for the T2 project while the Long Thanh airport project requires more than US$10 billion. Associate Professor Nguyen Van Thu, former director of the Institute of Transport Planning and Management, said it is crucial to assess the role and urgency of the Long Thanh airport project in development of the transport sector and the country’s economy. Thu told the Daily last week that relevant agencies should learn a lesson about the construction of seaport complex No. 5 in Ba Ria-Vung Tau Province. The port complex was touted as a major transshipment hub but it has attracted a small number of vessels. Thu said the 1,255-hectare Hong Kong Airport and Singapore’s 1,300-hectare Changi Airport can handle 50 million passengers per year while the number of passengers going through Tan Son Nhat Airport is less than half although its total area is 1,500 hectares. As the airports in Hong Kong and Singapore are the two regional hubs for airlines and can handle 40-50 million passengers, Thu asked about the possibility of Vietnam to attract 100 million passengers per year. At the eighth session of the 13th NA ending last month, the law-making body requested the Government to look into the concerns of deputies over the airport project and organize seminars to get comments of experts and specialists before reporting the project to the NA at the next session. Christmas decorating services bloom in Vietnam Decorators for the Christian festival Christmas are going up all over Hanoi, with the services of professional decorators in high demand throughout the capital. Christianity was brought to predominantly Buddhist Vietnam in the 16th century and strengthened its presence under French colonial rule, though the majority of Roman Catholic Christians moved to the south of the country after France was defeated in 1954 and withdrew from the country. In recent years, young Vietnamese have been embracing Christianity, and its religious festivals, such as Christmas, which marks the purported birth of Jesus Christ on December 25 more than 2,000 years ago, have become increasingly popular among all religions. Christmas is marked by gift giving among family and friends, and it is considered the highlight of the year for retailers. In Hanoi, major trade centres, such as Royal City, Lotte and Vincom Tower are decorated with snowflakes, brightly decorated Christmas trees, which are a symbol of the festival, colourfully wrapped gift boxes. Also seen more on the streets this year are the jolly red-costumed character, Santa Claus, who contemporary mythology holds delivers presents to children while thy sleep on Christmas Eve. He is based on a Christian saint, Nicholas, who lived in what is now western Turkey and is reputed to have given gifts of food and clothing to orphaned and poor children. Major hotels, such as the colonial-period Metropole in Hanoi's French Quarter, are brightly decorated with lights and dioramas, including on its western portico a giant Santa Claus in his sleigh, pulled by flying reindeer, which take him around the world from his mythical home in the North Pole. Many small shops around the city have decorated their windows with ribbons and festive stickers. Decorators this year are offering various kinds of package. Customers can just buy simple materials to do their own decorations, or they can hire the decorators for a full service, including customised 3-D dioramas. A 90-centimetre Christmas tree costs VND247,000 (USD12) while a six-metre tree can cost up VND28,350,000. Bui Danh, a shop owner in Hanoi, said, "I didn't used to decorate the shop for Christmas, but many shops are getting into the festive spirit so I can't be left out. "I hope the decorations and a season discount will help attract more customers. Last year, I did everything on my own, but I hired professional this year to save time and effort." Dong Nai calculates cost of resettling residents for Long Thanh Airport Building the 5,000ha Long Thanh International Airport would affect about 4,540 households in six communes of southern Dong Nai Province, the provincial People's Committee said. During a working session held in the province on Thursday by the National Assembly Standing Committee task force and ministries, the committee said that it would be difficult to resettle affected households and provide them with financial support. During a working session held in the province on Thursday by the National Assembly Standing Committee task force and ministries, the committee said that it would be difficult to resettle affected households and provide them with financial support. Chairman of the committee Dinh Quoc Thai said that an estimated VND13 trillion (US$613 million) was needed for compensation and site clearance. In the first phase of construction, more than 2,500ha in Binh Son, Long An, Suoi Trau and Cam Duong communes will be revoked and the 1,800 affected households will be compensated about VND5 trillion ($235 million). In the second phase, about 2,500 ha will be revoked and more than VND8 trillion ($377 million) will be spent to compensate 2,700 affected households. Thai said the province had allocated two 282ha resettlement areas north of the airport, which would accommodate 3,500 households and cost VND5.3 trillion ($250 million). The province had also begun to work on vocational training for affected residents. To ensure that site clearance was on schedule, the committee proposed to the Government that it be in charge of compensating, resettling and creating jobs for affected households. It also suggested the Government allocate capital for compensation and resettlement. Chairman of the National Assembly Economic Committee Nguyen Van Giau said these suggestions would be transferred to the National Assembly Standing Committee for consideration. The Long Thanh International Airport project is scheduled to be built in three phases. During the first phase, scheduled to be completed in 2025, the airport will be able to serve 25 million passengers and 1.2 million tonnes of cargo per year. An estimated VND164 trillion (nearly $7.8 billion) will be allocated to Phase 1, with VND85 trillion coming from the State budget and the rest coming from official development assistance. The airport is expected to serve 80 million and 100 million passengers each year by the end of the second and third phase respectively. Danish provide Vietnam with green energy access The Danish government is actively supporting Vietnam’s access to green growth in wind power. At conferences held last week in Hanoi and Ho Chi Minh City on wind power development, Danish Ambassador  to Vietnam John Nielsen said that Vietnam had huge potential for wind power and Denmark could provide support to help develop growth in the field. The ambassador highlighted the fact that wind power is cheaper than coal or gas imports and that Vietnam is shifting from being a net energy exporter to a net importer. In addition, wind energy ramps up very quickly, ready to provide substantial electricity growth required in Vietnam in the short term. This can provide a solution for Vietnam to meet the high annual surge in energy demand, estimated to exceed 15 per cent in the coming years. Moreover wind energy is a green energy which powers the country while at the same time combating climate change. It also helps dilute the reliance on hydro power which is heavily affected by seasonal changes. Wind energy development can also bring an increased number of job opportunities for local communities and add economic activity in remote and poor regions. “Vietnamese government is implementing a green strategy so we foresee that the wind power will develop in the future. Of course there will be long way to go but the potential is huge and wind power will be taken into the national electricity grid in the future,” Nielsen said. The ambassador added that the questions to develop wind power in Vietnam now involved building capacity, finding financing solutions and getting the right price for the product. There are many factors to make wind power more fruitful in Vietnam. Among the most important things to implement a green energy strategy are the government’s commitments to support green energy development and incentives to private developers and investors in the field. Denmark has long supported the development of green growth in Vietnam, for instance via programmes on climate change and energy efficiency. Denmark’s companies are bringing state-of-the-art technologies, financing, labour and skills into Vietnam. According to the World Bank, Vietnam has wind power potential of about 513,360MW, more than 200 times as much as the capacity of the Son La Hydropower Plant. Despite Vietnam’s potential to become a Southeast Asian giant in wind power development, it continues to lag behind regional neighbours. Le Tuan Phong, deputy head of the General Department of Energy under the Ministry of Trade and Industry, said that Vietnam was increasingly dependent on international sources of power to meet the country’s growing power needs. Vietnam-Japan partnership to focus on industrialisation The Japan-Vietnam partnership is expected to put an increasingly heavy focus on industrial development and hi-tech agriculture products. Minister of Planning and Investment Bui Quang Vinh said the governments and business communities of both countries would continue to concentrate on improving policy-making and implementation processes in Vietnam. Long-term policy-making for industrial development was necessary in order to create competitive advantages for Vietnam, as joining the ASEAN Economic Community would be a focus of the sixth stage of the Vietnam-Japan Joint Initiative. Both sides will spend more time on further discussions as part of the Vietnam-Japan Joint Initiative launched 11 years ago in order to make Vietnam’s investment environment more attractive to Japanese investors. The Ministry of Planning and Investment and the Japanese Embassy in Vietnam held a meeting last week to work out achievements and shortcomings in the implementation of the 5th Vietnam-Japan Joint Initiative from July 2013 to December 2014. Nearly 80 per cent of the contents agreed upon in the fifth phase were successfully achieved, while the remaining elements were in the process of being implemented. The fifth phase focused on 13 issues, including taxation, customs, retail, transport, intellectual property, macroeconomic stabilisation, infrastructure development and food safety. During the fifth phase, around 40 policy dialogues were held to create avenues for agencies from the two countries to exchange and discuss main contents of the action plan to realise the initiative. “Both sides have agreed to enter the sixth stage of the joint initiative, demonstrating their desire to help Japanese investors feel more secure and confident about developing their business in Vietnam,” said Japanese Ambassador Hiroshi Fukada. Takahashi Kyouhei, co-chairman of the Japan-Vietnam Economic Council said that the fifth phase was successful and expected that the next phase to be inaugurated would bring more competitive advantages for Vietnam as the ASEAN Economic Community would fuel attempts for Vietnam to become more competitive. “Japan will continue its support for the development of Vietnam and the ASEAN region in general during the sixth phase of the initiative,” stressed Kyouhei. Exports of wood products seen growing next year The export value of wood products is forecast to reach US$7 billion next year, said general secretary of the Viet Nam Timber and Forest Products Association (Vifores), Nguyen Ton Quyen. This is five years earlier than the target set in the national forestry strategy in the 2006-20 period, as approved by the Prime Minister. Quyen added that the forestry industry expects to increase exports when Viet Nam signs more trade agreements, including the Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement (VPA/FLEGT) about the management of wood processing for legal exports to the European Union, the Trans-Pacific Partnership (TPP) and the ASEAN Free Trade Area (AFTA). According to the Ministry of Agriculture and Rural Development, the eighth joint expert meeting and fourth negotiation session on the VPA/FLEGT recently took place with the aim of ensuring that all Vietnamese timber and timber products that are exported to the European Union are legally sourced and produced. The two sides showed their willingness to complete the negotiations over the FLEGT-VPA in 2015. Quyen revealed that the forestry industry is also considering increasing its previous export target in the 2006-20 national forestry strategy by $5 billion to touch $12 billion by 2020. If suitable measures and effective support policies are taken, the annual export turnover of the industry will likely reach $15 billion to $20 billion in the next 10 years, Quyen said. However, he added, the scale of the world demand for wood products is roughly $300 billion per year, which means Viet Nam's total exports are still quite modest. This year, Viforest estimated that the export of wood products will reach $6.2 billion, five times higher than that of five years ago. Exports to the main markets, such as the United States and Japan, have increased significantly by 14.17 per cent and 19.47 per cent respectively. Experts attributed the preference for Vietnamese wood products in large markets to their good quality and competitive prices. They said that many importers have turned to Viet Nam's products instead of China's, due to high Chinese labour costs. Viet Nam's wood products have so far been presented at more than 100 markets, including major ones such as the United States, the European Union, Japan and China. Viet Nam is the sixth largest exporter in the world and the second largest exporter of wood interior decoration products, claiming nearly four per cent of the world market share. Producers make salt while sun shines Viet Nam's salt production has jumped by 16.4 per cent this year to 1.18 million tonnes, reported the Ministry of Agriculture and Rural Development. According to the ministry's Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production. Favourable weather and an increase in the area devoted to salt production are the reasons for the increase, it said. The area are has gone up by 625ha this year to 14,814ha. But farmers are faced with low salt prices. Le Canh Nhan of Diem Van village, Tuy Phuoc District, the central province of Binh Dinh, said, "This year there was a lot of sunshine … and my 11.3ha salt field yielded more than 2,000 tonnes, two times that of last year." But prices have declined dramatically, he said. In November Nhan sold his salt for VND800-900 a kilogramme compared with VND1,450 a year earlier. The Central Salt and Trading Joint Stock Company blamed this on not only on the bumper harvest but also low quality. Most of the salt is bought by traders, who routinely push prices down during harvest season. The salt production season has finished Binh Dinh with an output of around 30,000 tonnes, 80 per cent more than last year, according to the province's Department of Agriculture and Rural Development. But of its 214ha of salt fields, only 13.6ha used canvas sheets on fields to produce cleaner salt while the rest used traditional methods. The department has petitioned the Ministry of Agriculture and Rural Development to adopt policies to buy salt to stabilise prices and providing farmers soft loans to buy canvas sheets to produce cleaner salt. Banks vie over consumer loans towards year-end As 2014 comes to a close, domestic and foreign-owned banks in Vietnam are in a fierce competition for a slice of the personal loans market. Many banks have recently geared up preparations to attract customers into this lucrative sector. VPBank launched its own credit firm called FE Credit four years ago. “We are currently attracting 70,000 customers everyday seeking personal loans,” said deputy CEO of VPBank Kalidas Ghose. VPBank reported credit growth of 34.8 per cent in the first three quarters of this year. Vietnam International Bank (VIB) has just introduced a $93.6 million loan package at a preferential interest rate of 0.68 per cent. According to Rahn Wood, head of retail banking at VIB, mortgages account for 40 per cent of the bank’s personal loans. Meanwhile, Sacombank has reported that 50 per cent of their outstanding loan balance in 2014 came from individual lending. Regarding the surge in personal loan packages, banking and finance expert Nguyen Chi Hieu said, “This upward trend will continue to the end of 2014. Banks will try to lure customers with low interest rates, especially for mortgage and real estate loans.” Experts noted that the end of the year until the Tet holiday is always the most popular time for personal loans, as Vietnamese people require money for home repair, shopping and car purchases. Dr. Le Tham Duong, head of the business management faculty at Ho Chi Minh University of Banking, said that recent macroeconomic recovery has spurred credit growth over the past two months. Another significant factor has been the low inflation rate, together with bank’s efforts to diversify their service offerings and open new branches. The shift to spending money instead of saving is another significant factor. At this year’s ASEAN Banker Forum, Cao Van Luc, senior executive vice president at the Bank for Investment and Development of Vietnam (BIDV) said that 75 per cent of the Vietnamese population did not yet have a bank account. Moreover, personal loans only make up 5 per cent of total loans, which means huge growth potential. Echoing this view, Duong Duc Hung, head of retail banking at ANZ Vietnam said, “This is the 14th most populated country in the world and 50 per cent of the population is under 35 years old. Furthermore, Vietnam’s growing middle class is in great need of loans to finance homes and cars. This will certainly spark growth in the personal loans market.” Ghose predicted that consumer credit will grow by 20 to 30 per cent over the next few years, especially a time the real estate market is showing signs of recovery. This increase is hoped to contribute to the banking sector’s 15 per cent overall credit growth target for this year. Experts at the ASEAN Banker Forum said that to attract more customers in the long run, commercial banks needed to improve their technologies, hire quality employees, diversify channels and focus on risk management. Phu Cuong Group seals Vestas Soc Trang deal Denmark Vestas Wind Systems last week signed an MoU for a 170MW wind farm project in Soc Trang province with the locally-owned Phu Cuong Group. The MoU brings wind energy to the forefront as a sustainable energy solution for Vietnam, which will help address the country’s fast-rising energy demand. According to Chris Beaufait, president of Vestas Asia Pacific & China, Vestas was an early mover in Vietnam’s wind power sector. “Vestas is honoured to be chosen as Phu Cuong’s preferred technology partner and to have the opportunity to contribute to this project as a best practice example in Vietnam.  With our global expertise in providing technical support at each phase of the wind development cycle, especially in facilitating low-cost financing options, I believe Vestas can help our customers to shape their competitive edge in the Vietnamese market,” said Beaufait. Nguyen Viet Cuong, president of Phu Cuong Group, said Phu Cuong was implementing a wind energy development plan with total of 800MW in Vietnam, beginning with the 170MW project. “We were looking for a first-class technology provider who has a strong commitment to our project and can improve accessibility to financing due to its leading reputation, while serving as a trusted technology partner for the long run. I’m confident that Vestas is just the partner we were looking for,” Cuong said. Counsellor Bo Mønsted from the Danish Embassy highlighted the Danish story of transitioning from a society dependent on imported fossil-fuel to a completely energy independent economy with an increasing amount of renewables in the energy mix. “Denmark has for more than 30 years managed to create economic growth without increasing energy consumption, while at the same time reducing CO2 emissions. Wind energy provides more than 33 per cent of Denmark’s electricity consumption today, which is the highest level of wind power integration in the world. We are happy to present Vestas who has the know-how and financial solutions that can help Vietnam fulfil its goal for a greener future” said Bo Mønsted. Prices of essential goods to be stabilised: ministry Prices of essential goods will be stable by the end of this year and beyond, according to the Finance Ministry's Price Management Department. The department said this month that many factors could contribute to the reduction of the pressure on prices, reported the Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) newspaper. Price reduction of some essential goods in the world market and the recent declines of domestic petrol prices on November 22 and December 6 would also contribute to the decrease of the prices of other goods, it said. Some goods also saw a decreasing trend in prices, including transport fees, food, sugar and milk products for children under six. Cement rates have declined as well. However, the department said that prices might go up by the end of December and early 2015 due to high goods stocks for the New Year and lunar New Year holidays. Bad weather could also cause an increase in the demand for some commodities. Therefore, the Ministry of Finance has requested agencies, sectors and provinces/cities to promote the control, management and stabilisation of the market and its prices. Stabilising the market and its prices could ensure enough demands on goods, as well as continue trade promotion and price stabilisation programmes. Prices of essential goods, including rice, sugar, milk and fertilizer, are expected to be stable in the future due to high supply. The department said that the price of rice on the world and local markets could continue to decline and achieve stability. Sugar would also have high supply and stable prices. In the local market, the output of sugar this month is estimated to reach 200,000 tonnes. There is high sugar inventory at 150,200 tonnes by November 15, which is 46,620 tonnes higher than the same period last year. Meanwhile, the local fertiliser market would see stability soon due to high supply catering to the demand brought about by the winter-spring rice crop in the south and winter rice crop in the north. Hoang Thanh Van, head of the Livestock Department, said farmers have approached the market well and paid attention to food safety and disease concerns. The supply of the main livestock products, such as pork, poultry meat and eggs, for the coming holidays will be stable. FPT agrees co-operation deal with Can Tho FPT Group, a Viet Nam software giant, and Can Tho City yesterday signed a Memorandum of Understanding (MoU) for Strategic Co-operation on Information Technology (IT) and Telecommunications in Da Nang. Following the MoU, which will last from 2015 to 2020, FPT will help the city become a beacon for advanced IT applications in socio-economic development and investment, as well as technology transfer. The two sides agreed to co-operate on e-Government, e-heath, human resource training and investment in a centralised IT centre in Can Tho. The city, with a population of 1.2 million, aims to become a key economic player in the Mekong Delta. Last year, FPT also signed deals on IT and Telecommunications with Hai Phong City, and Nghe An and Vinh Phuc provinces. It also built a public administration centre in Quang Ninh Province. FPT has operated in 19 countries. It has a labour force of 20,000 and a revenue of US$1.3 billion. Handbag, suitcase, umbrella export values rise Viet Nam's handbag, suitcase and umbrella export values amounted to US$2.3 billion in the first 11 months of this year, up 34 per cent over the same period last year, reported Dau tu (Vietnam Investment Review). The Ministry of Industry and Trade attributed the strong growth to contributions from foreign direct investment companies, which accounted for 70 per cent of the overall revenues. Domestic firms mainly took part in the processing phases, it added. The Viet Nam Leather, Footwear and Handbag Association predicted that the current growth rate could propel the export values to exceed $2.5 billion this year. Ford Viet Nam sees record sales in November Ford Viet Nam reported sales of 1,552 vehicles in November, a record for any month and representing a 99 per cent increase year-on-year. It took year-to-date sales up by 72 per cent to 12,338 units, fetching the company a nine-per cent market share. It had been 7.4 per cent at the same time last year. The company attributed the record to continued strength in demand across its line-up in the country. "Consumers across Viet Nam continue to see Ford as an aspirational yet affordable brand, and an expansive line-up of global vehicles allows us to meet each of their needs," Jesus Metelo Arias, the company's managing director, said. Tan Cang-Hiep Phuoc Port inaugurated in HCMC Saigon Newport Corporation (SNP) put into operation its Tan Cang-Hiep Phuoc Port and welcomed the first Container Ship Saigon Bridge in Ho Chi Minh City on December 15. Tan Cang-Hiep Phuoc Port lies near the Soai Rap Estuary, a convenient place for a transshipment port and serves as a major hub for goods of Asian countries and helps reduce overloads at Cat Lai Port in HCMC’s District 2. After 11 months of construction, the first phase of the port project was completed with 12-hectare yard for containers, a 300-meter-long pier to handle 50,000-DWT vessels, a 253-meter-long dock for barges, and other specialised equipment. The second phase of the project is expected to finish next June. Raising the bar for wood sector exports The forestry sector is considering bumping up the annual export target to US$12 billion by 2020 in light of an anticipated expansion of global trade to be ushered in by free trade in the offing. Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Products Association (Vietfores) made the assessment recently and emphasised that Vietnam’s wood export turnover is expected to hit US$7 billion by 2015, five years ahead of schedule under the national forestry strategy for the 2006-2020 period which have been approved by the Prime Minister.   Nguyen Ton Quyen, general secretary of the Vietnam Timber and Forest Products Association (Vietfores) recently revealed that the country is currently on course to achieve an annual export volume of US$7 billion by 2015. Wood exporters are forecast to gross even larger revenues and enjoy greater benefits when tariffs are removed or reduced Quyen said adding that it is likely the sector will achieve annual exports of US$15-20 billion within ten years. Quyen said there has been an upward trend in wood product exports in almost all markets. The US and Japanese market have increased on-year by 14.17% and 19.47%, respectively. Vietnam’s wood products are currently available in more than 100 foreign markets, with the largest markets being the US, EU, China and Japan. The country has also transformed into the number one exporter in ASEAN and ranks second in Asia and sixth in the world. Viforess recently announced that they are forecasting the nation’s wood exports to reach US$6.2 billion this year, which means that exports have increased twofold in the past five years. This year, most all wood exporting enterprises are reporting higher revenues. For example, Duc Thanh Wood Processing Joint Stock Company reports it has achieved a growth in revenue of VND197 billion, up 19.4%. Despite difficulties in 2013, this year, Truong Thanh Furniture Corporation (TTF) says it also expects increased sales of VND63 billion, with interior volume accounting for over 55% of the total. According to experts, Vietnam’s wood products are finding pathways and making significant inroads into major foreign markets due to their high quality, and competitive prices. Many big wood importers are now coming to Vietnam in lieu of China to place orders as a result. Notably, the economic downturn in Europe has resulted in some of the world’s largest manufacturers in Italy, Germany and the US either cutting back on production or closing their businesses entirely. Meanwhile, there have been positive signs of recovery in the consumption of wood products in the local market with the rate of interior products in the domestic market increasing by 20% and 40%. Quyen says though the global market stands at US$300 billion annually, Vietnam’s export volume remains modest but leading market analysts are predicting it to rise sharply upon the signing of major trade agreements with the EU and the Asia-Pacific nations. The fourth high-level negotiation round on a Voluntary Partnership Agreement regarding Forest Law Enforcement, Governance and Trade (VPA/FLEGT) between Vietnam and the European Union (EU) recently took place in Hanoi. At the top of the agenda were ways to control, exploit, process and transport wood products legally to all EU nations. MoU to boost Japanese city investment in Vietnam Deputy Minister of Planning and Investment Nguyen Van Trung and Japan’s Mayor of Hamamatsu city Yasutomo Suzuki on December 15 signed a memorandum of understanding (MoU) with the aim of enhancing the city’s investment in Vietnam and boosting cooperation between the two countries. The MoU emphasised the assistance of the two governments in enhancing the cooperation between Vietnam and Hamamatsu city on the basis of maximising the potential and enlisting support from Japan. The MoU focuses on organizing workshops on investment, exchanging work teams and establishing and operating business support centres. The two sides will also provide market information and necessary technologies as well as creating favourable conditions for Japanese supporting industry businesses from the city to seek investment opportunities and transfer technology to Vietnamese partners. Hamamatsu City has great potential to develop supporting industries, especially in automobile, motorcycle, and musical instrument spare parts. Roundtable focuses on Vietnam-France economic ties There are good prospects for Vietnam-France trade in 2015 once the Vietnam-EU free trade agreement is signed, Trade Counselor at the Vietnamese Embassy Nguyen Canh Tuong said at a recent roundtable on the two countries’ economic ties in Paris. The two sides are working hard on preparing for the final negotiations round scheduled for March next year. The official said the agreement will offer preferential tax rates for many commodities, while commitments on investment and intellectual property protection will encourage Vietnamese and EU businesses, including those from France, to intensify trade and investment exchanges. Participants at the December roundtable agreed that despite positive growth in economic exchange between Vietnam and France, the two countries have yet to fully tap their potential. Exports from Vietnam to France saw a slight increase in 2014 but French export to Vietnam stagnant due to the domestic crisis and also the fact that French businesses lack a suitable strategy for the Vietnamese market. According to Manager of Vietnam-France Strategies Company Jean-Phillip Eglinger, France’s small and medium-sized enterprises operating in food, agricultural products, health, pharmaceuticals, and waste treatment have a good chance of success in Vietnam when cooperating with Vietnamese partners as they can support each other to explore and exploit their respective market. At the same time, he suggested Vietnamese companies improve production and processing capacities to create brand names for their advantageous products as tea, coffee and cashew nuts. France is now the biggest European provider of Official Development Aid (ODA) to Vietnam and the third biggest in the world. Vietnam’s economy is forecast to recover strongly in 2015 as its government is taking drastic measures to improve the investment and business climate in order to attract more investment and expand export market. Two more projects granted licenses in Bac Ninh Two more projects with a total registered capital of US$70 million have been granted investment licenses in northern Bac Ninh province, bringing the locality’s total new ones to 130 so far this year. Ngo Sy Bich, head of the Bac Ninh Industrial Zones Management Board, said the US$40-million project invested by Unilever Vietnam International Co. Ltd. specialises in producing family care products such as liquid detergent, home cleansing substances and fabric conditioner. Meanwhile, Srithai Vietnam Co. Ltd. invests US$30 million in a project to produce beverages and industrial plastic products. It is expected to be operational in the last quarter of next year, generating jobs for over 150 workers, Bich added. Santi Visawa Metekul, Director General of Srithai Vietnam, said this is the company’s second plant in Vietnam after the first in southern Binh Duong province. He spoke highly of support from the authorities and the province’s investment incentives. Vietnam, Cambodia discuss to achieve US$5 bln trade Vietnamese and Cambodian experts and investors discussed ways to achieve a US$5 billion trade by 2015 during a workshop in Phnom Penh, Cambodia on December 15. Director of the Vietnam Economic Research Institute Tran Dinh Thien updated them with Vietnam’s recent economic landscape and gave recommendations to Vietnamese investors in Cambodia. Participants discussed in-depth opportunities and challenges in investing in Cambodia, including the potential of Vietnam-Cambodia trade and Vietnam’s legal protection in the country. Vietnam is currently the fifth biggest investor in Cambodia with over US$3 billion worth of 129 projects, predominantly in rubber, fertiliser, health care, banking, aviation and telecommunications. Between 2009 and 2014, growth of two-way trade averages nearly 30 percent per year. In January-October, the total export-import value hit US$2.6 billion and is forecast to top US$3.5 billion this year. The event was co-hosted by the Vietnamese Embassy in Cambodia and the Association of Vietnamese Investors in Cambodia. Int’l tourists to Vietnam increase sharply at year-end Vietnam welcomed more than 7.2 million foreign visitors in eleven months of 2014, up 5.4% compared to the same period last year. According to Vietnam National Administration of Tourism (VNAT), tourists from the Republic of Korea made up the majority with 764,835, a year-on-year increase of 12%. Notably, Hong Kong travellers reached the highest growth rate in November with 13,569 visitors, an increase of 61.2% compared to the same period last year, followed by Germany with 129,507 visitors, an increase of 51.3%. The number of Russian visitors to the country tended to go up at the year-end with 50,894 in November, bringing the total number in eleven months of the year to 330.349, a 25.2% year-on-year increase. The figure is expected to increase in December with most of them travelling to ideal destinations in south-central Vietnam and Phu Quoc island. Vietnam learns Singapore’s experience in economic development A Vietnamese delegation, headed by Nguyen Phong Quang, deputy head of the Steering Committee for the Southwestern Region, have paid a three-day visit to Singapore. The December 13-15 visit was to study and learn Singapore’s management model to complete the project on developing the Phu Quoc island specialised economic zone of southern Kien Giang province. Through the visit, the delegation will propose mechanisms relating to land, corporate tax, financing-credit, customs and foreigners-related policies with a view to outlining suitable policies to develop the island in the future, Quang told Vietnam News Agency correspondents in Singapore. During the visit, the delegation had a meeting with representatives from the Ministry of National Development, and the Urban Redevelopment Authority (URA), and visited Mariana Barrage. The delegation left Singapore on December 15 for Malaysia. Salt production surges despite low prices Vietnam's salt production has jumped by 16.4 percent this year to 1.18 million tonnes, reported the Ministry of Agriculture and Rural Development. Favourable weather and an increase in the area devoted to salt production are the reasons for the increase, according to the ministry's Department of Processing and Trade for Agro-Forestry-Fisheries Products and Salt Production. The area has gone up by 625ha this year to 14,814ha. But farmers are faced with low salt prices. Le Canh Nhan of Diem Van village, Tuy Phuoc district, the central province of Binh Dinh, said, "This year there was a lot of sunshine, and my 11.3ha salt field yielded more than 2,000 tonnes, two times that of last year." But prices have declined dramatically, he said. In November Nhan sold his salt for 800-900 VND a kilogramme compared with 1,450 VND a year earlier. The Central Salt and Trading Joint Stock Company blamed this on not only on the bumper harvest but also low quality. Most of the salt is bought by traders, who routinely push prices down during harvest season. The salt production season has finished Binh Dinh with an output of around 30,000 tonnes, 80 percent more than last year, according to the province's Department of Agriculture and Rural Development. But of its 214ha of salt fields, only 13.6ha used canvas sheets on fields to produce cleaner salt while the rest used traditional methods. The department has petitioned the Ministry of Agriculture and Rural Development to adopt policies to buy salt to stabilise prices and providing farmers soft loans to buy canvas sheets to produce cleaner salt. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR